Provisions under Section 89 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Liability of Directors of Private Company”, are as under:
Section 89 of CGST Act 2017: Liability of Directors of Private Company (CHAPTER XVI – LIABILITY TO PAY IN CERTAIN CASES)
(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.
1. CBEC notifies 1st July 2017 as the Commencement date for Section 89 of the CGST Act 2017, vide Notification 9/2017 Central Tax.
Govt. has notified the CGST Act, 2017 on 12th April, 2017, which has subsequently been amended through the CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance (No. 2) Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020. Further, CBEC/ CBIC has also issued various Notifications from time to time, relating to the commencement date of various Sections/ Provisions in the respective CGST/ Amendment Acts, wherever required.
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