Bombay High Court Quashed GST Recovery proceeding initiated against Director of a Company
Pleased to share an important judgment of the Hon’ble Bombay High Court quashing recovery proceedings initiated against Director of the Company for recovering GST dues of the Company.
The Hon’ble High Court observed that no show cause notice was issued to the director calling upon him to show cause on tangible materials that the amount due and payable by the company was liable to be recovered from the director under section 79, read with section 89, of the MGST Act. The same ought to have basic consideration when Section 79 of the MGST Act was invoked for recovery against the director. A bare reading of section 79 would bring about a cumulative effect that the principal liability is not on the “director” who is not a registered person within the meaning of Section 79(1). Further Section 89 clearly provides that before taking any action of recovery against the directors of the company, a subjective satisfaction is required to be achieved by the concerned officer in regard to whether a person concerned against whom recovery is sought to be made was a director of a Private Limited Company for the concerned period. It is only after such satisfaction to the effect that such person was the director of the company, the liability could be fastened against such director. Thus, as to on what basis the GST authorities have proceeded to make the attachment of the director’s property, is not known. No reasons are attributed whatsoever except for the impugned order. Such orders directly affect the director’s right to property guaranteed under Article 14 and 300A of the Constitution.
The copy of the order is as under:
