Gujarat HC :

 

Department can't provisionally attach bank accounts of directors for recovery of tax & penalty (H.M. Industrial (P.) Ltd.)

 

The Competent Authority for recovery of dues from a private company had provisionally attached the bank accounts of the directors. The Competent Authority was of view that GST Act permits recovery of the dues of the private company from its directors in case such amount cannot be recovered from the company. The directors filed writ petition against the order of attachment of the bank accounts.

   

The Honorable High Court observed that GST Act empowers recovery of any tax, interest or penalty if amount is due from a taxable person in respect of supply of goods or services. Moreover, if such amount cannot be recovered from the private company, the directors of the company do not ipso facto become liable to pay such amount. The amount can be recovered from director if the director fails to prove that 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.

Therefore, direct attachment of bank accounts of directors for recovery of tax & penalty was without any authority of law. Hence, authority was directed to release the attachment of the bank accounts of directors.