Partner retirement & GST liability: Why this HC ruling matters
Failure to inform the GST department about a retiring partner can have serious tax consequences.
Let’s break down the implications for firms, partners, and tax consultants.
Key takeaway from the High Court ruling
| Legal Issue | Explanation |
|---|---|
| Case Name | Ashok Kumar Garg v. Commissioner of State Tax, Punjab (2024) |
| Court | Punjab & Haryana High Court |
| Key Holding | A retired partner is still liable for GST dues if no proper intimation was given to the department under Section 90. |
| Reasoning | Retirement was only internal. Department records still showed the partner as active. |
| Effect | Ex-partner had to bear recovery actions like attachment of property. |
| Legal Basis | Section 90, CGST Act, 2017 – Joint and several liability of partners until notice is served. |
| Who’s at risk? | Any partner retiring without ensuring compliance under GST laws. |
What does Section 90 of CGST Act say?
“Where a partnership firm is liable to pay tax… the firm and each of the partners shall… be jointly and severally liable for such payment until the date of retirement.”
Further, if the retiring partner fails to inform the Commissioner, they continue to be liable even post-retirement.
How to avoid GST liability after partner retirement
To ensure smooth exit and avoid personal liability:
- ✅ File Form GST REG-01 (Amendment) on retirement
- ✅ Update partnership deed and upload it in GST portal
- ✅ Send formal intimation to the jurisdictional GST officer
- ✅ Retain acknowledgment of the notice
- ✅ Keep proof of retirement deed and related board resolution
Compliance checklist for retiring partner
| Step | Action |
|---|---|
| 1 | Ensure firm files amendment application under GST |
| 2 | Manually notify jurisdictional officer in writing |
| 3 | Keep copies of proof of delivery and officer acknowledgment |
| 4 | Update PAN-Aadhaar-KYC wherever linked with firm |
| 5 | Monitor GST portal to verify name is removed as partner |
Expert View: Don’t rely only on portal changes
“GST liability doesn’t vanish just because internal paperwork is done. You must formally notify the department as required under Section 90 — especially in sensitive cases involving dues or litigation,” says a tax partner at a leading CA firm.
Hidden risks if you skip GST intimation
- 🔴 Recovery from personal assets
- 🔴 Credit score impact due to GST recovery proceedings
- 🔴 Summons or notices even after years of exit
- 🔴 Legal cost to defend unjust liability
Related reading on Efiletax
External Source
Summary
Partner retirement doesn’t free you from GST dues unless you formally notify the department.Follow due process to avoid recovery actions.
FAQ – Partner Retirement & GST
Q1. Is portal update enough to avoid GST liability?
A: No. You must also send a written notice to the jurisdictional GST Commissioner as per Section 90.
Q2. What form is used to update GST registration?
A: GST REG-01 (for amendments in existing registration).
CTA:
Retiring as a partner? Don’t risk personal liability. Let Efiletax handle your GST retirement compliance — from portal updates to officer intimation.