Section 93 of GST – 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, where a person, liable to pay tax, interest or penalty under this Act, dies, then-

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, andif 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, penalty or interest 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, 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, 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 up to 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, 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.

Introduction

Section 93 of GST Act is subject to Insolvency and Bankruptcy Code, 2016. The objects clause of Insolvency and Bankruptcy Code inter-alia is to provide that it has been enacted amongst other things to ‘alter the order of priority of payment of Government dues’. Section 53 of Insolvency and Bankruptcy Code, 2016which provides for distribution of assets of a company starts with a non-obstante clause against ‘any law’ enacted by Central or State Government. As per Section 53, the Government dues stand fifth in the order of priority as follows:

(a) Insolvency Resolution process costs and liquidation costs paid in full(b) Workmen’s dues for 24 months preceding liquidation commencement date and debts owed to a secured creditor(c) Wages and unpaid dues owed to employees for 12 months preceding liquidation commencement date(d) Financial debts owed to unsecured creditors(e) Amounts due to Central Government and the State Government, including amount to be received on account of Consolidated Fund of India and Consolidated Fund of State, in respect of whole or part of two years preceding liquidation commencement date’

GST is received by Central and State Governments in the Consolidated Fund of India and Consolidated Fund of State respectively As per Section 74 of CGST Act, 2017, tax, interest, penalty can be demanded for a period of five years from the relevant date. However, Section 82 of CGST Act, 2017 states that any amount payable by a taxable person or any other person on account of tax, interest or penalty shall be a first charge on the property of such taxable person or other person, subject to Insolvency and Bankruptcy Code, 2016.

Analysis

(i) If a person (an individual) who is liable to pay tax dies: –

In case of continuation of business: the legal representative or the any other person who carries on the business after his death is liable to pay tax, interest, penalty or any other due which is due from the deceased person; orIn case of discontinuation of business before or after his death: the legal representative is liable to pay the tax, interest, penalty or any other dues to the government, from and to the extent of the estate of the deceased.

(ii) The legal representative or any other person as the case may be is liable to pay the tax, interest or penalty whether-

It has been determined before his death but has remained unpaid orIt has been determined after his death

(i) In case of a HUF or AOP property is partitioned between the member or group of members then the liability to pay tax, interest or penalty — Is on each member or group of members (jointly and severally) who got a portion in that property.— The member or the group of members is/are liable only upto the time of partition whether such • Tax, interest and penalty has been determined before partition but has remained unpaid or• is determined after such partition (i) In case the firm is dissolved-

Every person who was a partner upto the time of dissolution is jointly and severally liable to pay the tax, interest or penalty.The person who was a partner is liable to pay tax even if it is

• determined before dissolution but not paid or• determined after dissolution.

The provision applicable for partnership firm would equally apply for LLP as well.

(i) In case the guardian is carrying on the business on behalf of a ward or the trustee who carries the business under the trust on behalf of beneficiary, then on the termination of guardianship or trusteeship,

The ward or the beneficiary is liable to pay tax, interest or penalty upto the time of such termination.The ward or the beneficiary is liable to pay tax, interest or penalty

• determined before the termination of guardianship or trusteeship but not paid or• determined after such termination The above provisions are applicable to extent that there is no contrary provision in Insolvency and Bankruptcy Code, 2016. Reference to discussion under para 4 of sch II would also be relevant in the context of continuity of business and liability to discharge arrears.  Recommended Articles

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