AUBSP»Indirect Tax»Goods and Services Tax (GST)»Taxpayers»Section 89 – Liability of directors of private company under CGST Act 2017

Section 89 – Liability of directors of private company under CGST Act 2017

Detail analysis of notified Rules and the provisions of Section 89 (Liability of directors of private company) of the Central Goods and Services Tax (CGST) Act, 2017.

Chapter XVI (Sections 85-94) of the Central Goods and Services Tax (CGST) Act, 2017 deals with provisions related to Liability to Pay in Certain Cases. Section 89 of Central Goods and Services Tax Act, 2017 (12 of 2017) provides for Liability of directors of private company under CGST Act 2017.

Recently, we have discussed in detail section 88 (i.e. Liability in case of company in liquidation) of CGST Act 2017. Today, we learn the provisions of section 89 of the CGST Act 2017. Complete Details of CGST Section 89 – Liability of directors of private company. You may CLICK HERE to download list of all sections of CGST Act 2017 in PDF format.

Notes on Section 89 of CGST Act 2017

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. In this note, you will learn detail of the provisions of section 89 of CGST Act 2017 read with Central GST Rules 2017.

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):

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.

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