Minor admitted to partnership benefits not personally liable for firm's tax arrears after ceasing from the firm

A person admitted only to the benefits of partnership as a minor could not be treated as personally liable for sales tax arrears of the firm after ceasing from it. The partnership records showed that the petitioner was never a full partner and had left the firm on 01/01/1976. Under the Partnership Act, a minor is not a partner and incurs personal liability only if, after attaining majority, he elects to become a partner; that contingency did not arise. Section 35 was inapplicable on these facts, so revenue recovery could not be fastened on the petitioner merely because of his earlier admission to the benefits of partnership. The demand and recovery proceedings were therefore unsustainable and were set aside.

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Issues: Whether the petitioner, who was admitted only as a minor to the benefits of partnership and later ceased from the firm, could be subjected to revenue recovery proceedings for sales tax arrears as a partner of the firm.

Analysis: The entry in the Register of Firms and the partnership deeds established that the petitioner was admitted only to the benefits of partnership and had ceased from the firm on 01/01/1976. Under the Partnership Act, a minor cannot be a partner and is not personally liable for partnership debts, and the liability contemplated by Section 30(7) arises only when such person elects to become a partner after attaining majority. That contingency did not arise here. Section 35 had no application to the facts, and liability could not be fastened on the petitioner merely on the basis of his earlier admission to the benefits of the firm. The record therefore did not justify treating him as personally liable for the arrears.

Conclusion: The demand and revenue recovery proceedings against the petitioner as a partner of the firm were unsustainable and were set aside, with the connected order quashed.

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