Partnership Firm - Death of a Partner

[Rajendra Prasad]

AB is a partnership firm in which A and B are the Partners.

There are carrying trading activity. They are having stocks and there are no fixed assets in the firm.

Mr A expired on 31st December 2018. As there is only one partner left in the firm and Mr A family members do not want to join as a partner the firm stand dissolved on 31st December 2018.

Mr B carried the business . He made sales with GST no of the Partnership Firm and filed the GST returns also.

Now as per IT act from st Jan 2019 to 31st March 2019 , it is to be treated as a proprietory concern. But sales were done with GST of the Firm.

Please clarify

1. From 1st January 2019 to 31st March 2019 , I would like to file IT returns as Prop concern eventhough GST is filed with the name of the firm.

2. What are the consequences as per GST Act and IT Act.

3. Now what are the rectification steps to be taken .

[Rajagopalan Ranganathan]

Sir,

The partnership firm was dissolved on 31.12.2018.Within 30 days from this date you have to apply for amendment of the registration certificate. The GST returns filed will be in tact.

[KASTURI SETHI]

1. Both Acts are independent of each other.

2. (i) A penalty of ₹ 10,000/- is imposable under Section 122 (xii) of CGST Act which is as follows:-.

(xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently.

he shall be liable to pay a penalty of ten thousand rupees. You were required to inform the department within 30 days from the date of change and you failed to do so.

OR

(ii) A penalty of ₹ 25000/- can be imposed upon under Section 125 of CGST Act.

3. Inform the department about the change in the constitution and get your registration certificate amended. Registration No.will remain the same.

[KASTURI SETHI]

In view of death of one of the partners, the partnership itself stands dissolved statutorily, by operation of law, in view of provision under Section 42(c) of the Indian Partnership Act, 1932.

------ Supreme Court in the case of S.K.Mishra & Others Vs. Mohd. Laiquddin Khan & another = 2019 (11) TMI 1 - SUPREME COURT

Order dated 18.10.19

[harish varun]

A partnership firm is a business structure in which two or more individuals may or may not be registered to manage and operate a business in accordance with the terms and objectives set out in a partnership agreement.

AI Summary

Partnership dissolution on death requires GST registration amendment; failure risks penalties though past GST returns remain valid. Death of a partner dissolves the partnership by operation of law. The firm must inform the tax authority and amend its GST registration within the statutory notification period; GST returns already filed under the firm's registration remain intact. Income tax treatment is independent and the surviving proprietor may file income tax returns in his name. Failure to notify/amend can attract statutory GST penalties for false registration particulars or non compliance. The remedial step is to notify the department, amend the registration certificate while the registration number continues, and regularise records.