Section 94 of CGST Act - Liability in Other Cases
Section 94 of the Central Goods and Services Tax Act, 2017 deals with GST liability where a taxable person is a firm, association of persons (AOP) or Hindu Undivided Family (HUF) and the business is discontinued, the constitution of the firm or AOP changes, the entity is dissolved, or the HUF business is partitioned.
Updated: 15 September 2026
Meaning and scope of Section 94
Section 94 is part of Chapter XVI, which contains special rules for determining who must discharge tax, interest and penalty when the person or entity that carried on the taxable business undergoes a specified change. Its purpose is to prevent GST dues relating to the earlier business period from becoming unenforceable merely because the business has been discontinued, a firm or AOP has been reconstituted or dissolved, or an HUF has partitioned its business.
Section 94 - Liability in other cases
Sub-section (1): Discontinuance of business
Where a taxable person is a firm, an association of persons or a Hindu Undivided Family and that firm, association or family discontinues business, tax, interest or penalty payable up to the date of discontinuance may be determined as if the discontinuance had not taken place.
Every person who was a partner of the firm or a member of the association or family at the time of discontinuance is jointly and severally liable for the tax and interest determined and the penalty imposed and payable by the firm, association or family. The rule applies whether determination or imposition occurred before or after discontinuance. Subject to this rule, the Act applies, so far as may be, as though each such partner or member were himself a taxable person.
Sub-section (2): Change in constitution
Where the constitution of a firm or association of persons changes, the partners or members before and after reconstitution are, without prejudice to Section 90, jointly and severally liable for tax, interest or penalty due from the firm or association for any period before reconstitution.
Sub-section (3): Dissolution or HUF partition
The rule in sub-section (1), so far as may be, also applies when a firm or association of persons is dissolved or when an HUF partitions the business carried on by it. For this purpose, references to discontinuance are read as references to dissolution or partition, as applicable.
Explanation to Chapter XVI
For Chapter XVI, a Limited Liability Partnership formed and registered under the Limited Liability Partnership Act, 2008 is also treated as a firm. The expression "court" means the District Court, High Court or Supreme Court.
The statutory text should always be read with the current consolidated CGST Act and applicable notifications, rules and judicial decisions.
Practical summary of liability under Section 94
| Situation | Persons potentially liable | Relevant liability |
|---|---|---|
| Firm/AOP/HUF discontinues business | Partners or members at the time of discontinuance | Tax, interest and penalty relating to the period up to discontinuance, subject to Section 94 |
| Firm/AOP is reconstituted | Partners or members before and after reconstitution | Dues for periods before reconstitution; Section 90 also remains relevant |
| Firm/AOP is dissolved | Persons covered through application of sub-section (1) | Liability applies by treating dissolution in the manner provided by sub-section (3) |
| HUF partitions its business | Members covered through application of sub-section (1) | Liability applies by treating partition in the manner provided by sub-section (3) |
| LLP | Covered as a "firm" for Chapter XVI | Chapter XVI provisions apply accordingly |
Why Section 94 matters
A discontinuance, dissolution, reconstitution or partition does not by itself erase GST liabilities attributable to the earlier business period. Taxpayers and persons entering or leaving a firm or AOP should therefore review outstanding returns, assessments, demands, interest, penalty proceedings and recovery exposure when restructuring or closing a business.
Related CGST Act provisions
Section 94 should be read with the other liability provisions in Chapter XVI, particularly Section 85 - Liability in case of transfer of business, Section 86 - Liability of agent and principal, Section 89 - Liability of directors of private company, Section 90 - Liability of partners of firm to pay tax, Section 93 - Special provisions regarding liability in certain cases and Section 95 - Definitions for advance ruling.
Official legal resources
For the authoritative and updated statutory position, refer to the India Code consolidated legislation database and the CBIC GST Acts portal.
This article is intended as a general legal reference. For a specific dispute, assessment, recovery or restructuring, the facts and the law applicable to the relevant tax period should be examined separately.