LIABILITY TO PAY IN CERTAIN CASES
85. Liability in case of transfer of business
(1) Where a taxable person, liable to pay tax under this Act,
transfers his business in whole or in part, by sale, gift, lease, leave and license,
hire or in any other manner whatsoever, the taxable person and the person
to whom the business is so transferred shall, jointly and severally, be liable
wholly or to the extent of such transfer, to pay the tax, interest or any penalty
due from the taxable person upto the time of such transfer, whether such
tax, interest or penalty has been determined before such transfer, but has
remained unpaid or is determined thereafter.
(2) Where the transferee of a business referred to in sub-section (1)
carries on such business either in his own name or in some other name, he
shall be liable to pay tax on the supply of goods or services or both effected by
him with effect from the date of such transfer and shall, if he is a registered
person under this Act, apply within the prescribed time for amendment of
his certificate of registration.
86. Liability of agent and principal
Where an agent supplies or receives any taxable goods on behalf of
his principal, such agent and his principal shall, jointly and severally, be
liable to pay the tax payable on such goods under this Act.
87. Liability in case of amalgamation or merger of companies
(1) When two or more companies are amalgamated or merged in
pursuance of an order of court or of Tribunal or otherwise and the order is to
take effect from a date earlier to the date of the order and any two or more of
such companies have supplied or received any goods or services or both to or
from each other during the period commencing on the date from which the
order takes effect till the date of the order, then such transactions of supply
and receipt shall be included in the turnover of supply or receipt of the
respective companies and they shall be liable to pay tax accordingly.
(2) Notwithstanding anything contained in the said order, for the
purposes of this Act, the said two or more companies shall be treated as
distinct companies for the period up to the date of the said order and the
registration certificates of the said companies shall be cancelled with effect
from the date of the said order.
88. Liability in case of company in liquidation
(1) When any company is being wound up whether under the orders
of a court or Tribunal or otherwise, every person appointed as receiver of
any assets of a company (hereafter in this section referred to as the
“liquidator”), shall, within thirty days after his appointment, give intimation
of his appointment to the Commissioner.
(2) The Commissioner shall, after making such inquiry or calling for
such information as he may deem fit, notify the liquidator within three months
from the date on which he receives intimation of the appointment of the
liquidator, the amount which in the opinion of the Commissioner would be
sufficient to provide for any tax, interest or penalty which is then, or is likely
thereafter to become, payable by the company.
(3) When any private company is wound up and any tax, interest or
penalty determined under this Act on the company for any period, whether
before or in the course of or after its liquidation, cannot be recovered, then
every person who was a director of such company at any time during the
period for which the tax was due shall, jointly and severally, be liable for the
payment of such tax, interest or penalty, unless he proves to the satisfaction
of the Commissioner that such non-recovery cannot be attributed to any gross
neglect, misfeasance or breach of duty on his part in relation to the affairs of
the company.
89. Liability of directors of private company
(1) Notwithstanding anything contained in the Companies Act, 2013 (18 of 2013), where any tax, interest or penalty due from a private company in respect of any supply of goods or services or both for any period cannot be recovered, then, every person who was a director of the private company during such period shall, jointly and severally, be liable for the payment of such tax, interest or penalty unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.
(2) Where a private company is converted into a public company and
the tax, interest or penalty in respect of any supply of goods or services or
both for any period during which such company was a private company cannot
be recovered before such conversion, then, nothing contained in sub-section
(1) shall apply to any person who was a director of such private company in
relation to any tax, interest or penalty in respect of such supply of goods or
services or both of such private company :
Provided that nothing contained in this sub-section shall apply to any
personal penalty imposed on such director.
90. Liability of partners of firm to pay tax
Notwithstanding any contract to the contrary and any other law
for the time being in force, where any firm is liable to pay any tax, interest or
penalty under this Act, the firm and each of the partners of the firm shall,
jointly and severally, be liable for such payment :
Provided that where any partner retires from the firm, he or the firm,
shall intimate the date of retirement of the said partner to the Commissioner
by a notice in that behalf in writing and such partner shall be liable to pay
tax, interest or penalty due upto the date of his retirement whether
determined or not, on that date :
Provided further that if no such intimation is given within one month
from the date of retirement, the liability of such partner under the first proviso
shall continue until the date on which such intimation is received by the
Commissioner.
91. Liability of guardians, trustees,etc .
Where the business in respect of which any tax, interest or penalty
is payable under this Act is carried on by any guardian, trustee or agent of a
minor or other incapacitated person on behalf of and for the benefit of such
minor or other incapacitated person, the tax, interest or penalty shall be
levied upon and recoverable from such guardian, trustee or agent in like
manner and to the same extent as it would be determined and recoverable
from any such minor or other incapacitated person, as if he were a major or
capacitated person and as if he were conducting the business himself, and all
the provisions of this Act or the rules made thereunder shall apply
accordingly.
92. Liability of Court of Wards, etc
Where the estate or any portion of the estate of a taxable person
owning a business in respect of which any tax, interest or penalty is payable
under this Act is under the control of the Court of Wards, the Administrator
General, the Official Trustee or any receiver or manager (including any
person, whatever be his designation, who in fact manages the business)
appointed by or under any order of a court, the tax, interest or penalty shall
be levied upon and be recoverable from such Court of Wards, Administrator
General, Official Trustee, receiver or manager in like manner and to the
same extent as it would be determined and be recoverable from the taxable
person as if he were conducting the business himself, and all the provisions
of this Act or the rules made thereunder shall apply accordingly.
93. Special provisions regarding liability to pay tax, interest or penalty in certain cases.
(1) Save as otherwise provided in the Insolvency and Bankruptcy
Code, 2016(31 of 2016), where a person, liable to pay tax, interest or penalty under this Act, dies, then––
(a) if a business carried on by the person is continued after his death
by his legal representative or any other person, such legal representative
or other person, shall be liable to pay tax, interest or penalty due from
such person under this Act ; and
(b) if the business carried on by the person is discontinued, whether
before or after his death, his legal representative shall be liable to pay,
out of the estate of the deceased, to the extent to which the estate is
capable of meeting the charge, the tax, interest or penalty due from such
person under this Act, whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death.
(2) Save as otherwise provided in the Insolvency and Bankruptcy Code,
2016(31 of 2016), where a taxable person, liable to pay tax, interest or penalty under this Act, is a Hindu Undivided Family or an association of persons and the property of the Hindu Undivided Family or the association of persons is partitioned amongst the various members or groups of members, then, each member or group of members shall, jointly and severally, be liable to pay the tax, interest or penalty due from the taxable person under this Act upto the time of the partition whether such tax, penalty or interest has been determined before partition but has remained unpaid or is determined after the partition.
(3) Save as otherwise provided in the Insolvency and Bankruptcy Code,
2016(31 of 2016), where a taxable person, liable to pay tax, interest or penalty under this Act, is a firm, and the firm is dissolved, then, every person who was a partner shall, jointly and severally, be liable to pay the tax, interest or penalty due from the firm under this Act upto the time of dissolution whether such tax,
interest or penalty has been determined before the dissolution, but has remained unpaid or is determined after dissolution.
(4) Save as otherwise provided in the Insolvency and Bankruptcy Code,
2016(31 of 2016), where a taxable person liable to pay tax, interest or penalty under this
Act,—
(a) is the guardian of a ward on whose behalf the business is carried
on by the guardian ; or
(b) is a trustee who carries on the business under a trust for a
beneficiary, then, if the guardianship or trust is terminated, the ward or the beneficiary shall be liable to pay the tax, interest or penalty due from the taxable person upto the time of the termination of the guardianship or trust, whether such tax, interest or penalty has been determined before the termination of guardianship or trust but has remained unpaid or is determined thereafter.
94. Liability in other cases
(1) Where a taxable person is a firm or an association of persons or
a Hindu Undivided Family and such firm, association or family has
discontinued business––
(a) the tax, interest or penalty payable under this Act by such firm,
association or family upto the date of such discontinuance may be
determined as if no such discontinuance had taken place ; and
(b) every person who, at the time of such discontinuance, was a
partner of such firm, or a member of such association or family, shall,
notwithstanding such discontinuance, jointly and severally, be liable for
the payment of tax and interest determined and penalty imposed and
payable by such firm, association or family, whether such tax and interest
has been determined or penalty imposed prior to or after such
discontinuance and subject as aforesaid, the provisions of this Act shall,
so far as may be, apply as if every such person or partner or member
were himself a taxable person.
(2) Where a change has occurred in the constitution of a firm or an
association of persons, the partners of the firm or members of association, as
it existed before and as it exists after the reconstitution, shall, without
prejudice to the provisions of section 90, jointly and severally, be liable to
pay tax, interest or penalty due from such firm or association for any period
before its reconstitution.
(3) The provisions of sub-section (1) shall, so far as may be, apply where
the taxable person, being a firm or association of persons is dissolved or
where the taxable person, being a Hindu Undivided Family, has effected
partition with respect to the business carried on by it and accordingly
references in that sub-section to discontinuance shall be construed as
reference to dissolution or to partition.
Explanation.––For the purposes of this Chapter,––
(i) a “Limited Liability Partnership” formed and registered under
the provisions of the Limited Liability Partnership Act, 2008 shall also
be considered as a firm ;
(ii) “court” means the District Court, High Court or Supreme Court.
