Liability of Guardians, Trustees, or Agents – Section 91 of GST

When it comes to taxation under the GST, liability is generally associated with the person who owns and operates a business. But what happens when a business is run by someone on behalf of a minor or an incapacitated person? This is where Section 91 of the CGST Act, 2017 becomes relevant.

In this blog, we will explore in detail the provisions of Section 91 and answer key questions about the liability of guardians, trustees, or agents managing businesses on behalf of others who are legally not in a position to manage their own affairs.

What Does Section 91 of the CGST Act State?

Section 91 of the CGST Act, 2017, deals specifically with the liability of guardians, trustees, or agents who run businesses on behalf of minors or incapacitated persons. According to this provision:

• If a business is carried out by a guardian, trustee, or agent for the benefit of a minor or other incapacitated person, any tax, interest, or penalty arising under the Act will be levied on and recovered from the guardian, trustee, or agent.

• The tax liability will be determined as if the minor or incapacitated person were a major or capacitated person conducting the business themselves.

• All the provisions of the CGST Act and the rules thereunder shall apply in the same manner to the guardian, trustee, or agent.

Who Is Considered a Guardian, Trustee, or Agent Under GST?

The CGST Act does not explicitly define guardians, trustees, or agents, so their interpretation is derived from general legal principles:

• A guardian is someone who manages the affairs of a minor (typically under the age of 18).

• A trustee is someone who manages a trust created for the benefit of a beneficiary, which could include a minor or an incapacitated individual.

• An agent is a person legally authorized to act on behalf of another, especially when that person is incapable of making business decisions due to age or mental condition.

Why Does GST Law Impose Liability on These Persons?

The rationale behind this provision is simple—to prevent tax evasion through the use of proxies or intermediaries. If the law allowed minors or incapacitated persons to run businesses through others without holding those managers accountable for tax dues, it could open the door for misuse.

By making guardians, trustees, or agents personally liable for tax obligations, Section 91 ensures that the business, though conducted for the benefit of a non-liable person, does not escape the tax net.

What Kind of Liabilities Can Be Imposed on Guardians, Trustees, or Agents?

Under Section 91, the following liabilities can be imposed:

• Tax payable under the CGST Act (including CGST, SGST/UTGST, or IGST as applicable)

• Interest for late payment or non-payment of taxes

• Penalties for non-compliance, fraud, or other offences

These liabilities are imposed in the same manner and to the same extent as they would be if the minor or incapacitated person were conducting the business directly.

How Does GST Compliance Work for Such Businesses?

A guardian, trustee, or agent who operates a business on behalf of a minor or incapacitated person must:

• Obtain GST registration in their own name as the person managing the business

• File GST returns and maintain appropriate records

• Pay tax dues, interest, and penalties, if any

• Comply with all GST provisions, including invoicing, e-way bills, audit requirements, etc.

The GST system does not distinguish between a regular taxpayer and a guardian or trustee managing the business—they are treated at par.

Are There Any Legal Safeguards for Guardians or Trustees?

While Section 91 imposes liability, it also indirectly clarifies the extent of responsibility. Guardians or trustees are not held liable for personal income tax on the business income unless otherwise applicable—they are only liable to fulfill GST obligations for the business they manage.

However, it is advisable that they:

• Maintain transparent records showing that the business is being conducted for the benefit of the minor/incapacitated person

• Ensure full compliance with GST laws to avoid penalties

• Consult with a tax professional or legal advisor to understand their obligations clearly

Can the Minor or Incapacitated Person Be Held Liable After Attaining Capacity?

Technically, under GST, the tax, interest, or penalty for the business carried out during the period of minority or incapacity is recoverable only from the guardian, trustee, or agent. However, once the person attains legal capacity (becomes a major or recovers mental capacity), any future business conducted by them personally would make them directly liable under the GST law.

Conclusion

If you are managing a business on behalf of a minor or incapacitated person, Section 91 of the CGST Act makes it your responsibility to comply with all tax-related obligations under GST. The law treats you as if you are the owner of the business for the purposes of tax, interest, and penalties.

Key takeaways:

• Guardians, trustees, or agents are fully liable under GST for businesses run on behalf of others.

• Tax dues, interest, and penalties are recoverable from them, not from the minor/incapacitated person.

• Full compliance with GST registration, return filing, and tax payment is mandatory.

For accurate compliance, always consider seeking advice from a qualified Chartered Accountant.

FAQs

Q1: Can a minor be registered under GST?
A minor cannot be registered directly under GST. A guardian or trustee must apply on behalf of the minor.

Q2: Who will be responsible if the guardian fails to pay GST?
The government will hold the guardian, trustee, or agent responsible and initiate recovery proceedings against them.

Q3: Does Section 91 apply to income tax as well?
No, Section 91 applies only to GST. Income tax laws have separate provisions for minors and incapacitated persons.