Section 91 of CGST Act, 2017 – Liability of Guardians, Trustees or Agents
📘 Section 91 of CGST Act, 2017 – Liability of Guardians, Trustees or Agents
Act: Central Goods and Services Tax Act, 2017
Chapter: Chapter XVI – Liability to Pay in Certain Cases
Section Covered: Section 91
Effective From: 01st July 2017
🔎 Introduction
Section 91 of the CGST Act, 2017 provides for GST liability in cases where a business is carried on by a guardian, trustee or agent on behalf of a minor or other incapacitated person.
The provision ensures that GST dues are not avoided merely because the real owner of the business is legally incapable of managing it.
📜 Bare Provision – Section 91
Where the business in respect of which any tax, interest or penalty is payable under this Act is carried on by any guardian, trustee or agent of a minor or other incapacitated person on behalf of and for the benefit of such minor or incapacitated person, the tax, interest or penalty shall be levied upon and recovered from such guardian, trustee or agent in like manner and to the same extent as it would be determined and recoverable from the minor or incapacitated person, as if such person were conducting the business himself.
✅ Meaning in Simple Words
If:
• A business belongs to a minor or legally incapacitated person
• The business is managed by a guardian, trustee or agent
Then:
👉 GST, interest and penalty will be recovered from the guardian/trustee/agent.
👉 The law treats the guardian as if he himself were running the business.
👥 Persons Covered Under Section 91
Section 91 applies when business is carried on by:
-
Guardian of a minor
-
Trustee of an incapacitated person
-
Agent managing business affairs
The essential condition is that the business is carried on for the benefit of the minor or incapacitated person.
💼 Nature and Extent of Liability
The guardian, trustee or agent becomes liable for:
✔ GST payable on outward supplies
✔ Interest on delayed payment
✔ Penalty under the CGST Act
✔ Any other recoverable dues
The liability is co-extensive and treated as if the minor were a major person conducting the business.
📊 Practical Illustration
A minor inherits a wholesale trading business. His mother acts as guardian and operates the business.
If GST returns are not filed and tax is unpaid:
➡ The department can recover the dues from the mother as guardian.
➡ She is legally responsible under Section 91.
⚖️ Judicial Principles & Case Law References
Although Section 91 is a GST provision, similar principles have been upheld under earlier tax laws and general legal jurisprudence regarding liability of representatives.
1️⃣ CIT v. Amarchand N. Shroff (1963) 48 ITR 59 (SC)
The Hon’ble Supreme Court held that legal representatives are liable only to the extent provided by statute, and liability must be clearly imposed by law.
👉 Principle Applied: When statute specifically creates liability (like Section 91), it is enforceable.
2️⃣ ITO v. Arunagiri Chettiar (1996) 220 ITR 232 (SC)
The Supreme Court observed that where a person carries on business on behalf of another, statutory liability may be fastened on such representative.
👉 Principle Applied: Representative assessee concept supports Section 91 framework.
3️⃣ State of Punjab v. Jullundur Vegetables Syndicate (1966) 17 STC 326 (SC)
Court held that tax liability must strictly arise from statutory provisions.
👉 Principle Applied: Section 91 expressly provides liability; hence recovery from guardian is valid.
4️⃣ Representative Liability Principle under Tax Law
Various High Courts have consistently held that where a statute provides for liability of managers, guardians or agents, such liability is enforceable irrespective of ownership.
This strengthens the enforceability of Section 91 under GST regime.
🎯 Objective of Section 91
The purpose of this provision is:
✔ To prevent tax evasion through legal incapacity
✔ To ensure accountability of the person actually managing the business
✔ To safeguard government revenue
✔ To maintain continuity of tax compliance
📌 Important Points to Remember
• Liability arises only if business is carried on by guardian/trustee/agent
• It must be on behalf of minor/incapacitated person
• Recovery can be initiated directly against the guardian
• All GST provisions apply as if minor were a major person
❓ Frequently Asked Questions (FAQs) – Section 91 CGST
Q1. Is a minor allowed to be registered under GST?
Yes, registration may exist in name of minor, but compliance responsibility falls on guardian.
Q2. Who is liable to pay GST if business belongs to a minor?
The guardian, trustee or agent managing the business is liable under Section 91.
Q3. Does Section 91 apply to both tax and penalty?
Yes, it applies to tax, interest and penalty.
Q4. Can recovery proceedings be initiated directly against the guardian?
Yes. The Act allows recovery from guardian as if he were the taxpayer.
Q5. Is liability limited to assets of minor?
No. Section 91 makes guardian personally liable to the same extent.
Q6. What if the guardian changes during the financial year?
The guardian managing the business during the relevant period may be held responsible.
Q7. Does Section 91 apply in case of mental incapacity?
Yes. It covers “other incapacitated person” which includes legal incapacity.
Q8. Is this liability automatic?
Yes, once conditions of Section 91 are satisfied, liability follows by operation of law.
Q9. Does this provision override contractual arrangements?
Yes. Statutory liability under GST prevails over private arrangements.
Q10. Can the guardian claim input tax credit?
Yes, ITC can be claimed in the normal course if other conditions are satisfied.
Q11. Is there any defense available to guardian?
Only factual defense such as proving he was not managing the business during the relevant period.
Q12. Does Section 91 apply to partnership firms?
No. Partnership liability is governed separately under Section 90 of CGST Act.
📝 Conclusion
Section 91 of the CGST Act, 2017 is a protective statutory provision ensuring that GST liability does not escape merely because the business owner is legally incapable of conducting business.
By imposing liability on the guardian, trustee or agent, the Act ensures accountability of the person who actually controls and benefits from the business operations.
This provision strengthens tax administration and ensures smooth enforcement under GST law.
Comments