Special provisions regarding liability to pay tax, interest or penalty in certain cases

(1) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a person, liable to pay tax, interest or penalty under this Act, dies, then— (a) if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due from such person under this Act; and (b) if the business carried on by the person is discontinued, whether by his death or otherwise, his legal representative shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such person under this Act: Provided that such liability shall be limited to the extent to which the estate is capable of meeting the charge. (2) Where a person, liable to pay tax, interest or penalty under this Act, is succeeded by any other person on account of transfer of his business for any reason, including death or retirement or otherwise, then the successor shall be liable to pay tax, interest or penalty due from such person under this Act. (3) Where a person, liable to pay tax, interest or penalty under this Act, is a firm or an association of persons and such firm or association is partitioned or dissolved, then— (a) the tax, interest or penalty payable under this Act by such firm or association of persons for the period up to the date of such partition or dissolution shall be payable by every person who was a partner or member of the firm or association of persons immediately before such partition or dissolution; and (b) every partner or member of such firm or association of persons shall, notwithstanding such disassociation, be liable severally and jointly for the payment of the tax, interest or penalty due in respect of such firm or association of persons, whether or not such tax, interest or penalty was determined before such partition or dissolution. (4) Where a person, liable to pay tax, interest or penalty under this Act, is a family and the Hindu Undivided Family is partitioned, then— (a) the tax, interest or penalty payable under this Act by such family for the period up to the date of such partition shall be payable by every member of such family; and (b) every member of such family shall, notwithstanding such partition, be liable severally and jointly for the payment of the tax, interest or penalty due in respect of such family, whether or not such tax, interest or penalty was determined before such partition. (5) Where a person, liable to pay tax, interest or penalty under this Act, is a guardian or trustee, and the business of such guardian or trustee is carried on by another person, then the provisions of sub-sections (1) to (4) shall apply in relation to such other person as they apply in relation to the guardian or trustee. (6) The provisions of this section shall apply even if the tax, interest or penalty due from a person, liable to pay tax, interest or penalty under this Act, was determined before his death or retirement or otherwise but has remained unpaid at the time of his death or retirement or otherwise.