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24 Aug 2025

Failure to Notify GST Commissioner About Partner's Retirement Makes Ex-Partner Liable

Failure to Notify GST Commissioner About Partner's Retirement Makes Ex-Partner Liable

Failure to Notify GST Commissioner About Partner's Retirement Makes Ex-Partner Liable: Punjab & Haryana High Court

Case Title: Harvinder Singh v. State of Punjab & Others
Neutral Citation: 2025:PHHC:088498-DB
Case No.: CWP-9172-2025
Court: High Court of Punjab and Haryana at Chandigarh
Coram: Hon’ble Mrs. Justice Lisa Gill & Hon’ble Mrs. Justice Sudeepthi Sharma
Date of Decision: July 18, 2025

Introduction

The Punjab & Haryana High Court, in a significant ruling, held that an ex-partner of a firm continues to remain liable for the firm’s GST dues if the statutory requirement of notifying the GST Commissioner about his retirement is not complied with.

The judgment in Harvinder Singh v. State of Punjab & Others underscores the importance of Section 90 of the CGST Act, 2017, which imposes joint and several liability on partners of a firm and specifically provides that the liability of a retiring partner continues until the date the Commissioner is formally intimated of such retirement.

This ruling is a reminder for businesses and professionals that mere execution of a retirement deed is not sufficient—statutory intimation to GST authorities is mandatory to avoid liability.

Relevant Legal Provision

Section 90 of the Central Goods and Services Tax Act, 2017:

  • Main Rule: Partners of a firm are jointly and severally liable for tax, interest, or penalty payable by the firm.

  • First Proviso: A retiring partner remains liable for all dues up to the date of retirement, whether determined or not, provided intimation of retirement is given to the Commissioner in writing.

  • Second Proviso: If intimation is not given within one month of retirement, the liability of the retiring partner continues until the Commissioner receives such notice.

Thus, the statutory scheme places the onus on the firm and the retiring partner to ensure timely notification.

Facts of the Case

  1. Constitution of the Firm

    • The petitioner, Harvinder Singh, was one of the partners of M/s Foreigners Auto Zone along with others.

    • Several changes took place in the constitution of the firm over time, with partners retiring and new partners inducted.

  2. Retirement of the Petitioner

    • Harvinder Singh retired from the partnership on 20.04.2021.

    • However, no intimation regarding his retirement was given to the GST authorities within the statutory time frame.

  3. Tax Proceedings

    • For AY 2023-24, the State Tax Officer assessed a liability of ?37,84,228/- on the firm under Section 73 of the PGST Act and CGST Act for non-payment of GST.

    • Recovery proceedings were initiated, and the petitioner’s property was attached under the Punjab Land Revenue Act.

  4. Petitioner’s Contention

    • He argued that since he had retired in April 2021, he had no role in the firm’s activities in 2022 when the default occurred.

    • He claimed that he could not notify the authorities as the GST portal credentials were with the continuing partners.

    • He submitted representations requesting removal of the property attachment.

  5. State’s Response

    • The State contended that:

      • As per GST records, Harvinder Singh continued to be shown as an active partner.

      • No amendment regarding his retirement was filed until 28.02.2025, almost four years later.

      • Under Section 90 CGST Act, his liability continued until formal intimation of retirement was received by the Commissioner.

Issues Before the Court

  1. Whether a retired partner can escape liability for GST dues of the firm when no intimation of his retirement was given to the GST Commissioner within the statutory period?

  2. Whether the petitioner can avoid liability on the ground that the GST portal credentials were with continuing partners?

Observations of the Court

  1. On the requirement of intimation under Section 90

    • The Court emphasized that the statute explicitly requires intimation of retirement to be given to the Commissioner within one month.

    • Failure to comply results in the liability of the retired partner continuing until such intimation is received.

  2. On the petitioner’s argument of practical difficulty

    • The contention that the petitioner could not access the GST portal was rejected.

    • The Court held that he could have taken steps, including formal communication to the Commissioner, much earlier instead of waiting until 2025.

  3. On the family relationship between partners

    • The Court noted that the petitioner’s brother was still an active partner in the firm, which further weakened his argument of lack of knowledge or inability to act.

  4. On the statutory nature of liability

    • The Court clarified that liability under Section 90 is statutory, overriding any internal agreement among partners.

Decision

  • The High Court dismissed the writ petition.

  • It held that since no intimation of retirement was given to the GST Commissioner within the prescribed time, the petitioner continued to remain liable for the firm’s GST dues of ?37,84,228/-.

  • The petitioner was given liberty to pursue remedies available under law, such as appeal under Section 107 of the PGST Act.

Key Takeaways

  1. Mere execution of a retirement deed does not absolve liability. Statutory intimation to GST authorities is essential.

  2. Section 90 CGST Act creates joint and several liability. Partners cannot contract out of this liability vis-à-vis tax authorities.

  3. Delay in filing intimation prolongs liability. A partner remains liable until the Commissioner acknowledges retirement.

  4. Practical difficulties (like lack of GST portal access) are not valid excuses. The law requires proactive compliance.

  5. Professional Caution: CS, CA, and legal advisors must ensure that all partnership changes are promptly updated with GST authorities to avoid such disputes.

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