The facts about nature of transaction not clear like, whether withdrawal is on retirement or in normal course , is not clear. Whether there is debit to partner’s capital account or not , is also not clear. As per normal laws, partner and firm are considered as one entity and hence any withdrawal of goods from firm can not be considered as sale by firm to partner. It is withdrawal of his own goods from joint ownership. However, under GST there can be different interpretation as firm is considered separate entity , different from partner. Therefore , if withdrawal of goods , whether raw materials etc or capital goods , against debit in capital account , will be considered to be taxable supply. If withdrawal is without consideration then also it will be supply as per para 1 of Schedule 1 to CGST Act. Firm and Partner are related persons as per Explanation under Section 15. As per para 1 of Schedule I to CGST Act the transaction between related persons without consideration is
also deemed supply.
The said para 1 is as under:
“Schedule I of Central Goods and Services Act 2017 – Activities to be treated as supply made even if made without consideration.
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.”
Thus, position is to be seen accordingly.
So far as position of withdrawing partner is concerned , there should not be any further obligation on him. However, if with such withdrawal he carries on business, he may be liable for registration as per threshold limits of registration as proprietor.