LIABILITY TO PAY TAX IN

CERTAIN CASES
SEC 85 - 94
1. SEC 85 : LIABILITY IN CASE OF TRANSFER OF BUSINESS
2. SEC 86 : LIABILITY OF AGENT AND PRINCIPAL
3. SEC 87 : LIABILITY IN CASE OF AMALGAMATION AND MERGER OF
COMPANIES
4. SEC 88 : LIABILITY IN CASE OF COMPANY IN LIQUIDATION
5. SEC 89 : LIABILITY OF DIRECTORS OF PRIVATE COMPANY
6. SEC 90 : LIABILTY OF PARTNERS OF FIRM TO PAY TAX
7. SEC 91 : LIABILITY OF GUARDIANS, TRUSTEES, ETC.
8. SEC 92 : LIABILITY OF COURT OF WARDS, ETC.
9. SEC 93 : SPECIAL PROVISION REGARDING LIABILITY TO PAY TAX, INTEREST
OR PENALTY IN CERTAIN CASES
10. SEC 94 : LIABILITY IN OTHER CASES
SEC 85 : LIABILITY IN CASE OF TRANSFER OF
BUSINESS

 Joint liability : the taxable person and the person to whom the
business is transferred shall, jointly, and severally, be liable wholly or
to the extent of such transfer.
 Only transferee liable : where the transferee of a business, carries on
such business, he shall be liable to pay tax on the supply goods or
services or both effected by him, with the effect from the date of such
transfer. And if he is a registered person under this act, apply within
the prescribed time for amendment of his certificate of registration.
SEC 86 : LIABILTY 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 tax payable on such
goods under this act.
SEC 87 : LIABILITY IN CASE OF
AMALGAMATION OR MERGER OF COMPANIES

 If the order is to take effect from a date earlier to the

date of the order and the amalgamated/ merger
companies have supplied or received any goods or
services, such transaction shall be included in the
turnover of supply or receipts of the respective
companies and they shall be liable to pay tax.
SEC 88 : LIABILITY IN CASE OF
COMPANY IN LIQUIDATION
 When any company is being wound up whether under the
orders of a court of tribunal or otherwise, every person
appointed as receiver of any assets of the company
(liquidator) shall be liable to pay tax.
SEC 89 : LIABILITY OF DIRECTORS OF
PRIVATE COMPANY
 Where any tax, interest or penalty due from a partner
company, then every person who was a director of the
private company , during such period shall, jointly and
severally, be liable for payment of such tax , interest or
penalty.
SEC 90 : LIABILITY OF PARTNERS OF
FIRM TO PAY TAX
 Where any firm is liable to pay any tax, interest or penalty
under this act, the firm and each partners of the firm shall
jointly, and severally , be liable for such payment.
 Where any partner retire from the firm, , shall give notice
to the commissioner in writing . Such partner is not liable
to pay tax.
SEC 91 : LIABILITY OF GUARDIANS,
TRUSTEES, ETC.
 Tax dues shall be recoverable from 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.
SEC 92 : LIABILITY OF COURT OF
WARDS, ETC.
 Tax dues shall be levied upon and be recoverable from
a) Court of wards
b) The administrator general
c) The official trustee
d) Or any receiver or manager appointed by or under any
order of a court.
 It include any person, who in fact manages the business.
SEC 93 : SPECIAL PROVISIONS REGARDING LIABILITY
TO PAY TAX, INTEREST OR PENALTY IN CERTAIN CASES

 Liability in case person dies : where a person liable to pay tax,

interest or penalty under in this act dies
A. Business carried on by deceased person is continued – legal
representative or other person who continues the business.
B. Business carried on by deceased person is discontinued (whether
before or after his death) – legal representatives shall be liable to
pay, out of the estate of the deceased.
 Partition of HUF or AOP : each member or group of member shall,
jointly and severally, be liable to pay tax , interest or penalty due
under this act.
 Firm is dissolved : 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.
 Guardianship or trust is terminated : 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.
SEC 94 : LIABILITY IN OTHER CASES

1. Firm, AOP, HUF has discontinued business : every person who at the time of such
discontinuation , was a partner of such firm or a member of such association or family ,
jointly and severally, be liable for the payment of tax , interest or penalty.
2. Change occurred in constitution of firm/ AOP : partner or member as ut exist before and
as it exists after reconstitution shall be jointly and severally be liable.