Section 89 of GST Act: Liability of directors of private company

Amended and updated notes on section 89 of CGST Act, 2017. Detail discussion on provisions and rules related to liability of directors of private company.

Amended and updated notes on section 89 of CGST Act, 2017. Detail discussion on provisions and rules related to liability of directors of private company.

Chapter XVI (Sections 8594) of the Central Goods and Services Tax Act, 2017 deals with the provisions related to liability to pay in certain cases. Section 89 of CGST 2017 provides for liability of directors of private company.

Recently, we have discussed in detail section 88 (Liability in case of company in liquidation) of CGST Act 2017. Today, we learn the provisions of section 89 of Central GST Act 2017.

Section 89 of the Central Goods and Services Tax Act, 2017 has been notified by the Ministry of Finance vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. This notification was come into force from 1st July, 2017 i.e. the commencement date of section 89 is 1-7-2017.

Name of ActThe Central Goods and Services Tax Act 2017
Enacted byParliament of India
Administered byCentral Board of Indirect Taxes & Customs
Governing bodyGST Council
Number of Chapters21
Number of Sections174
You are reading:
Chapter No.XVI
Chapter NameLiability to Pay in Certain Cases
Section No.89
Section NameLiability of directors of private company
Updated 2024 EditionGST Law Book PDF

Section 89 of Central GST – Liability of directors of private company1

Section 89 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017.

Section 89(1) of CGST Act

Section 89(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.

Section 89(2) of CGST Act

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.

  1. Section 89 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. ↩︎


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