Section 89 of CGST Act

Liability of directors of private company

• Enforced w.e.f. 1-7-2017.

Section 89 (1)

Notwithstanding anything contained in the Companies Act, 2013 (18 of 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.

Section 89 (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.