CGST Section 89: Liability of Directors of Private Company

Provisions under Section 89 of the CGST Act 2017 relating to “Liability of Directors of Private Company”:

Section 89: Liability of Directors of Private Company (CHAPTER XVI: LIABILITY TO PAY IN CERTAIN CASES) [*1]

(1) Notwithstanding anything contained in the Companies Act, 2013, where any tax, interest or penalty due from a private company in respect of any supply of goods or services or both for any period cannot be recovered, then, every person who was a director of the private company during such period shall, jointly and severally, be liable for the payment of such tax, interest or penalty unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

(2) Where a private company is converted into a public company and the tax, interest or penalty in respect of any supply of goods or services or both for any period during which such company was a private company cannot be recovered before such conversion, then, nothing contained in sub-section (1) shall apply to any person who was a director of such private company in relation to any tax, interest or penalty in respect of such supply of goods or services or both of such private company:

Provided that nothing contained in this sub-section shall apply to any personal penalty imposed on such director.

Notes (History of Amendments in Bare Text):

1. CGST Section 89 introduced vide GOI Notification dated 12/04/2017, followed with CBEC Notification 9/2017 on commencement date of 01/07/2017.