Section 90 of the Central Goods and Services Tax Act, 2017 deals with the liability of partners of a firm to pay tax, interest and penalty under GST law. The provision establishes that when a firm is liable to pay any tax, interest or penalty under the CGST Act, the firm and each of its partners are jointly and severally liable for that payment.
The section also contains specific provisions for a partner who retires from the firm. A retiring partner remains liable for tax, interest and penalty due up to the date of retirement, whether the amount has already been determined or is determined later. The retirement must be intimated to the Commissioner within the prescribed one-month period; otherwise, the partner’s liability under the first proviso continues until the date on which the Commissioner receives the intimation.
Section 90 is therefore important for partnership firms because a change in the constitution of a firm or the retirement of a partner does not automatically eliminate the partner’s GST liability for the period during which the partner was associated with the firm.
What Is Section 90 of the CGST Act?
Section 90 is titled “Liability of partners of firm to pay tax.”
The section provides that, notwithstanding:
- any contract between the partners to the contrary; or
- any other law for the time being in force,
where a firm is liable to pay tax, interest or penalty under the CGST Act, the firm and each of its partners shall be jointly and severally liable for such payment.
Section 90 then provides a special rule for a partner who retires from the firm.
The provision can therefore be divided into three key principles:
- The firm itself remains liable for GST dues.
- Each partner can also be jointly and severally liable.
- A retiring partner remains liable for tax, interest and penalty due up to the date of retirement, subject to the statutory retirement-intimation provisions.
Why Is Section 90 Important?
A partnership firm is a business structure in which two or more persons carry on business together under an agreement.
From a GST perspective, the firm may be the taxable person responsible for complying with GST requirements. However, Section 90 specifically extends liability to the individual partners.
This means that partners cannot simply rely on an internal partnership agreement saying that a particular partner will be responsible for GST payments.
Section 90 expressly begins with a non obstante clause, meaning that the statutory liability operates notwithstanding a contrary contract or other law.
For example, partners may agree internally that Partner A will manage all GST compliance. That agreement may regulate responsibilities between the partners, but it does not by itself remove the statutory liability imposed by Section 90.
Text and Structure of Section 90
Section 90 contains the main rule followed by two provisos.
The main provision states that where a firm is liable to pay tax, interest or penalty under the CGST Act, the firm and each partner are jointly and severally liable.
The first proviso deals with retirement of a partner and states that the retiring partner remains liable for tax, interest or penalty due up to the date of retirement, whether determined or not on that date.
The second proviso deals with the consequence of failure to intimate the Commissioner about the retirement within one month. In that situation, the partner’s liability under the first proviso continues until the date on which the Commissioner receives the intimation.
Section 90(1) – Joint and Several Liability of Firm and Partners
The central rule under Section 90 is that when a firm is liable to pay any:
- tax;
- interest; or
- penalty
under the CGST Act, both the firm and each of its partners are jointly and severally liable for the payment.
What Does Jointly and Severally Liable Mean?
The expression jointly and severally liable is important.
It means that the liability is not restricted to the firm as a separate entity. The partners are also brought within the statutory liability.
The provision does not say that the outstanding amount must simply be divided equally between all partners.
For example, suppose ABC & Co., a partnership firm, has:
- GST tax liability: ₹6 lakh
- Interest: ₹1 lakh
- Penalty: ₹2 lakh
Total liability: ₹9 lakh.
Where Section 90 applies, the firm and its partners are jointly and severally liable for the relevant amount.
The internal agreement between the partners cannot, by itself, override the statutory liability imposed by Section 90.
Liability Covers Tax, Interest and Penalty
Section 90 is not restricted to GST tax alone.
It expressly covers:
Tax
This includes GST liability payable by the firm under the CGST Act.
Interest
Where interest becomes payable under the applicable GST provisions, it forms part of the liability covered by Section 90.
Penalty
Where a penalty is legally imposed on the firm under the CGST Act, the statutory wording of Section 90 also covers penalty.
Therefore, a partner considering the firm’s GST exposure should examine the complete liability rather than looking only at unpaid output tax.
Can a Partnership Agreement Remove a Partner’s GST Liability?
Generally, an internal agreement cannot override the statutory liability under Section 90.
This follows directly from the opening words of the provision, which operate notwithstanding any contract to the contrary and any other law for the time being in force.
Suppose three partners agree that:
“Only Partner A will be responsible for all GST liabilities of the firm.”
This may be an internal arrangement between the partners, but it does not automatically prevent the GST law from applying Section 90 to the firm and each partner.
The partners may have rights of contribution or adjustment between themselves under their contractual arrangements or applicable partnership law, but that is separate from the statutory GST liability.
Example: GST Liability of All Partners
Suppose XYZ & Co. is a partnership firm with three partners:
- Partner A
- Partner B
- Partner C
The firm has an outstanding GST liability of ₹15 lakh.
Under Section 90, the firm and each partner are jointly and severally liable for the relevant GST liability.
The partners cannot simply argue that:
- Partner A handled accounts;
- Partner B handled sales; and
- Partner C had no involvement in GST filing.
Such internal allocation of responsibilities does not, by itself, remove the statutory liability created by Section 90.
The exact recovery process and facts of the case, however, must be considered separately.
Retirement of a Partner Under Section 90
The retirement of a partner is specifically addressed by the first proviso to Section 90.
When a partner retires from the firm, the partner or the firm must intimate the Commissioner of the date of retirement through a written notice.
The retiring partner remains liable for:
- tax;
- interest; and
- penalty
that is due up to the date of retirement, regardless of whether the amount was determined on the date of retirement or is determined later.
This is one of the most important features of Section 90.
Tax Can Be Determined After Retirement
A partner cannot necessarily avoid liability simply because the GST department determines the liability after the partner has retired.
The first proviso specifically covers tax, interest or penalty due up to the date of retirement whether determined or not on that date.
Example
Suppose Partner A retires from XYZ & Co. on 31 March 2025.
The firm’s GST liability relates to supplies made before 31 March 2025, but the department determines the additional tax liability in December 2026.
The fact that the determination was made after Partner A’s retirement does not, by itself, remove Partner A’s statutory liability for the amount due up to the retirement date.
This is why the tax period and the date of retirement are extremely important.
One-Month Intimation Requirement
The first proviso requires the partner or the firm to intimate the Commissioner about the retirement date.
The second proviso provides a specific consequence where this intimation is not given within one month from the date of retirement.
If no such intimation is given within one month, the partner’s liability under the first proviso continues until the date on which the intimation is actually received by the Commissioner.
This makes timely communication particularly important.
Example
Suppose:
- Retirement date: 1 April 2025
- One-month period ends: 1 May 2025
- Intimation actually received by Commissioner: 20 June 2025
Under the second proviso, the retiring partner’s liability under the first proviso continues until 20 June 2025, rather than ending for this purpose merely because the partner retired on 1 April.
The statutory wording therefore gives significant importance to the date on which the Commissioner receives the retirement intimation.
Who Can Give the Retirement Intimation?
The first proviso states that the partner or the firm shall intimate the Commissioner of the date of retirement by written notice.
Therefore, the obligation is not restricted only to the retiring partner.
The firm can also provide the required intimation.
For compliance purposes, it is important to maintain evidence showing:
- the date of retirement;
- the date on which the notice was prepared;
- the date on which it was submitted;
- the date on which it was received by the Commissioner; and
- relevant GST registration records.
What Happens If the Retirement Is Not Reported?
Failure to give the required intimation within one month has a specific statutory consequence.
The retiring partner’s liability under the first proviso continues until the date on which the intimation is received by the Commissioner.
Therefore, merely executing a retirement deed between partners does not answer the GST-law question.
The firm and the retiring partner should ensure that the retirement is properly communicated to the GST authorities.
Section 90 and GST Registration
Changes in the constitution of a firm can also have implications for GST registration.
The GST registration provisions separately deal with amendments to registration details and changes in constitution.
Therefore, when a partner retires or a new partner joins, the firm should review its GST registration details and complete the applicable amendment procedure in addition to considering the specific retirement-intimation requirement under Section 90.
Section 90 should not be understood as replacing the separate GST registration requirements.
👉 Read More → Section 91 – Liability of guardians, trustees, etc.
Section 90 and Reconstitution of a Firm
A firm may undergo several types of changes, including:
- retirement of a partner;
- admission of a new partner;
- change in profit-sharing arrangement;
- change in constitution;
- death of a partner;
- dissolution of the firm.
These events can have different legal and GST consequences.
Section 90 specifically addresses the liability of partners and contains a specific rule for retirement.
It should therefore be read together with other applicable provisions of the CGST Act rather than assuming that every change in partnership constitution has exactly the same consequence.
Section 90 and Dissolution of a Firm
Section 90 should also be distinguished from the provisions dealing specifically with dissolution or discontinuance of a business.
Where a firm is dissolved, other provisions of the CGST Act can become relevant to determining the liabilities of persons who were partners of the firm.
Section 90 itself primarily establishes the general joint-and-several liability of the firm and partners and the special rule applicable to retirement.
Therefore, where a firm is being dissolved rather than merely experiencing the retirement of one partner, the complete GST position should be examined under the applicable provisions.
Section 90 and Limited Liability Partnership
An important point in the broader Chapter XVI framework is that the CGST Act treats a Limited Liability Partnership (LLP) as a firm for the purposes of the relevant provisions of Chapter XVI.
The Explanation to the chapter states that a Limited Liability Partnership formed and registered under the Limited Liability Partnership Act, 2008 shall also be considered as a firm.
This means that the terminology used in Chapter XVI must be read along with its specific statutory explanation.
However, the exact legal consequences for an LLP should be examined in light of the CGST Act, the LLP Act and the facts of the particular case rather than assuming that every aspect of an ordinary partnership and LLP is identical.
Section 90 and Insolvency and Bankruptcy Code
The CGST Act contains several provisions dealing with liabilities in circumstances such as liquidation, dissolution and insolvency.
Where an insolvency proceeding is involved, the applicable provisions of the Insolvency and Bankruptcy Code, 2016 may also become relevant.
Section 90 establishes GST liability of the firm and partners, but it should not be read in isolation where an insolvency process is formally underway.
The CGST Act itself contains references to the IBC in other provisions dealing with liability in certain circumstances.
Section 90 vs Section 89
Section 89 deals with liability of directors of private companies, while Section 90 deals with liability of partners of firms.
The two provisions have similar concepts of extending liability beyond the business entity, but their statutory structures are different.
| Point | Section 89 | Section 90 |
|---|---|---|
| Business structure | Private company | Firm |
| Persons concerned | Directors | Partners |
| Main liability | Tax, interest and penalty | Tax, interest and penalty |
| Joint and several liability | Yes, subject to Section 89 | Yes |
| Retirement rule | No specific retirement proviso | Specifically provided |
| Conversion provision | Private company to public company | No equivalent provision in Section 90 |
| Defence based on gross neglect etc. | Specifically provided | Not provided in Section 90 |
The distinction is important because the statutory wording applicable to directors cannot simply be transferred to partners.
Section 90 vs Section 86
Section 86 deals with the liability of agent and principal.
Under Section 86, where an agent supplies or receives taxable goods on behalf of the principal, the agent and principal are jointly and severally liable to pay tax payable on those goods.
Section 90, in contrast, concerns a partnership firm and its partners.
Therefore:
- Section 86 → agent and principal;
- Section 89 → directors of private companies;
- Section 90 → partners of firms.
These provisions address different business relationships.
Section 90 vs Section 91
Section 91 deals with businesses carried on by a guardian, trustee or agent of a minor or other incapacitated person.
Section 90 deals with partnership firms and their partners.
The two provisions therefore operate in different circumstances.
Section 91 focuses on the person conducting the business on behalf of a minor or incapacitated person, whereas Section 90 specifically establishes the liability of partners of a firm.
Section 90 vs Section 96
Section 96 deals with liability in other cases, including circumstances involving discontinuance of business by a firm, association of persons or Hindu Undivided Family.
Section 96 can impose liability on persons who were partners or members at the time of discontinuance.
The provision also separately addresses changes in the constitution of a firm or association of persons.
Therefore, Section 90 and Section 96 may become relevant in related circumstances, but they serve different statutory purposes.
Practical Example of Partner Retirement
Consider a partnership firm named ABC Traders having three partners:
- Partner A
- Partner B
- Partner C
Partner C retires on 31 March 2025.
The firm has GST liabilities relating to supplies made before 31 March 2025.
Situation 1: Timely intimation
The firm sends written intimation of Partner C’s retirement to the Commissioner within one month.
Partner C remains liable for tax, interest and penalty due up to the date of retirement, whether the liability had already been determined or is determined later.
Situation 2: No intimation within one month
Suppose Partner C retires on 31 March 2025 but the retirement is not intimated within one month.
The statutory liability under the first proviso continues until the date on which the Commissioner actually receives the intimation.
This demonstrates why retirement compliance should not be treated as merely an internal partnership matter.
Practical Example of GST Demand After Retirement
Suppose Partner A retires from a firm on 30 June 2025.
During August 2026, the GST authorities determine an additional tax liability relating to taxable supplies made by the firm before 30 June 2025.
The fact that Partner A was no longer a partner when the tax was determined does not automatically eliminate the liability contemplated by the first proviso to Section 90.
The relevant question is whether the tax, interest or penalty was due up to the date of retirement.
This distinction between the date of the underlying liability and the date of its determination is expressly recognised in Section 90.
Practical Compliance Checklist for Partnership Firms
Partnership firms should maintain proper GST compliance when there is any change in partners.
Important steps include:
Before or on retirement
The firm should identify:
- the exact retirement date;
- outstanding GST liabilities;
- pending notices;
- pending assessments;
- tax periods affected;
- interest exposure; and
- penalty exposure.
After retirement
The firm or retiring partner should ensure that the Commissioner receives the required written intimation within one month.
The firm should also update applicable GST registration information through the prescribed registration procedure where required.
Maintain documentary evidence
The firm should preserve:
- retirement deed;
- amended partnership deed;
- GST registration amendment records;
- copy of retirement intimation;
- acknowledgement or evidence of receipt;
- GST returns;
- tax payment records;
- reconciliation statements; and
- correspondence with the GST department.
These records can help establish the relevant dates and liability position.
Does Retirement Completely End a Partner’s GST Liability?
No.
Section 90 specifically states that a retiring partner remains liable for tax, interest or penalty due up to the date of retirement, whether determined or not on that date.
Therefore, retirement does not erase historical GST liability.
The provision is designed to preserve liability for the period during which the partner was associated with the firm.
Can a Retiring Partner Be Liable for GST Dues Arising After Retirement?
Section 90’s first proviso specifically addresses tax, interest or penalty due up to the date of retirement.
Accordingly, the key issue is the period and circumstances to which the liability relates.
A partner’s retirement date should therefore be carefully matched with:
- the tax period;
- date of supply;
- period of liability;
- assessment or adjudication;
- payment status; and
- date of retirement.
A blanket assumption that all future GST liabilities automatically belong to the retiring partner would not accurately reflect the wording of the provision.
What Is the Importance of the One-Month Period?
The one-month period is particularly important because the second proviso creates a direct consequence for failure to intimate the Commissioner.
If the retirement is not intimated within one month, the partner’s liability under the first proviso continues until the date on which the Commissioner receives the intimation.
Therefore, a firm should not delay the GST-related formalities after a partner retires.
👉 Read More → Section 89 – Liability of directors of private companies
Key Points of Section 90
| Particular | Section 90 |
|---|---|
| Section | 90 |
| Title | Liability of partners of firm to pay tax |
| Persons covered | Firm and partners |
| Main liability | Tax, interest and penalty |
| Nature | Joint and several liability |
| Contract overriding liability? | No; statutory provision operates notwithstanding contrary contract |
| Retirement covered? | Yes |
| Retiring partner’s liability | Amount due up to retirement date |
| Whether liability must already be determined? | No |
| Retirement intimation | Partner or firm must intimate Commissioner |
| Time for intimation | Within one month from retirement |
| Failure to intimate | Liability under first proviso continues until intimation is received |
| LLP | Treated as a firm for Chapter XVI purposes under the statutory Explanation |
Frequently Asked Questions About Section 90
Conclusion
Section 90 of the CGST Act creates a clear statutory framework for the liability of partners of a firm. Where a firm is liable to pay GST tax, interest or penalty, the firm and each of its partners are jointly and severally liable for the payment. This liability applies notwithstanding any contrary arrangement between the partners.
The section is particularly important when a partner retires. A retiring partner remains liable for tax, interest and penalty due up to the date of retirement, even if the liability is determined after retirement. The partner or the firm must intimate the Commissioner about the retirement within one month. If this intimation is not given within the prescribed period, the partner’s liability under the first proviso continues until the date on which the Commissioner receives the intimation.
For partnership firms, proper GST compliance should therefore continue whenever there is a change in the constitution of the firm. Retirement documents, GST registration amendments, tax-period records and proof of timely communication with the GST authorities should be maintained carefully. Section 90 should also be read together with the other provisions of Chapter XVI that deal with liability in special circumstances.
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