A Limited Liability Partnership (‘LLP’) is required to file certain mandatory returns (Form 8 & Form 11) whether it does the business or not. Non-filing of due returns will attract penalties and prosecution under the LLP Act and Designated Partners are liable to face the same action. The penalty for LLPs defaulting in filing of any statutory return is Rs.100 per day, without any maximum limit.
Cessation of operation cannot be a reason for non-filing of returns. An LLP continues to exist until its formal closure. An LLP being a separate legal entity registered under law, it is mandatory to be closed as stipulated under the LLP Act.
Before the amendment in Limited Liability Partnership Rules, 2009 in 2017, if any LLP wants to make any application for striking off the name of LLP from the register, it has to file its overdues return before filing the said application. Sometimes it has been seen that LLP closed its business earlier and do not file its returns (Form 8 & Form 11) later on, however when they want to strike off LLP, then they have to file overdues returns with huge penalties.
Further, in exercise of the powers conferred by sub-sections (1) and (2) of section 79 of the Limited Liability Partnership Act, 2008 (6 of 2009), the Central Government has amended the Limited Liability Partnership Rules, 2009, by vide Notification No. G.S.R.470 (E) dated 16.05.2017 as Limited Liability Partnership (Amendment) Rules, 2017 and gave relaxation to the LLP that those LLPs which have neither carried of their business not filed any return with concerned Registrar and want to struck off their LLPs, will have to file the overdue returns of the years in which the LLPs have actually worked i.e. before the date of closure of their business i.e. the LLPs need not to file any returns for the period in which the business was actually not carrying on, however a declaration shall be given by the Designated partners w.r.t. date of closure of their business.
Pursuant to Rule 37(1A)(I) of LLP Rules, the LLP shall file overdue returns in Form 8 and Form 11 up to the end of the financial year in which the LLP ceased to carry on its business or commercial operations before filing Form 24. Therefore, if any LLP wants to close its business, then it has to file its overdue returns in Form 8 and Form 11 up to the end of the financial year in which the LLP ceased to carry on its business or commercial operations, along with payment of additional fee of Rs. 100 per day.
In accordance with the aforesaid provisions, the LLP shall file overdue returns in Form 8 and Form 11 only the financial year till when it has ceased to carry on business operations. For instance, the LLP was having its operation and doing business for Financial year 2015-16 and thereafter ceased to carry on its operations, then it can make an application for strike off in Form 24 in the year 2021 without filing overdue Form 8 and Form 11 for the financial year 2016-17 to 2020-21.
Explanation: the date of cessation of commercial operation is the date from which the Limited Lability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.