2026-VIL-720-MAD
  1. Home
  2. 2026-VIL-720-MAD

SGST High Court Cases

GST - Recovery of dues from partnership firm and partnership members - Liability of partners and authorized signatories under Section 88(3) of the CGST Act, 2017 - Petitioner in partnership firm challenged recovery proceedings initiated under Section 79(1)(c) of the Act seeking to attach bank accounts of the partnership firm to recover tax dues of a defaulting Private Limited company in respect of which one of the partners was a Director during the period of default - Whether recovery of tax dues from the partnership firm and its bank accounts could be initiated merely on account of the partnership of one of its members with the defaulting company and the directorship of such member in the defaulting company during the tax period - HELD - When a private company is wound up and any tax, interest or penalty determined under the GST Act on the company for any period cannot be recovered from the company under liquidation, then every person who was a Director of such company at any time during the period for which the tax was due shall, jointly and severally, be liable for the payment of such tax, interest or penalty under Section 88(3) of the Act unless he proves to the satisfaction of the Commissioner that such 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 - The recovery proceedings have been validly initiated against the petitioners on account of the tax arrears from the Directors of the defaulting company as the said petitioner was the Director of the defaulting company during the period of the default and also a partner in the partnership firm during the period of accrual of demand - The burden of proof that the tax default was not on account of the said petitioner but on account of other Directors is to be discharged only before the Commissioner as is contemplated under Section 88(3) of the Act - The impugned recovery notices cannot be interfered with and liberty is given to the petitioner to work out her remedy within the statutory framework of Section 88(3) of the Act - The writ petitions are dismissed - GST - Bank attachment for recovery of tax dues - Validity of procedures followed under Section 79(1)(c) read with Section 145(1) of CGST Rules, 2017 - Petitioner challenged attachment of bank accounts of the partnership firm on the ground that recovery proceedings were initiated against a separate legal entity merely on the basis of common link of one of the partners with the defaulting company - Whether recovery proceedings validly initiated against a partnership firm for recovery of tax dues of a defaulting company could be sustained when the partnership firm itself had no direct liability for such dues - HELD - The scheme under Section 88(3) of the CGST Act makes it clear that when a private company is wound up and tax cannot be recovered from the company, every person who was a Director of such company during the period for which the tax was due shall be liable for the payment of such tax, interest or penalty - Since the petitioner in the individual petition was also the partner in the partnership firm and was the initial partner of the said firm after the execution and registration of the partnership deed and continued after default was made in the said company, the challenge to the impugned recovery communication addressed to the bank account holders cannot be countenanced - All partners of the defaulting company are also partners of the petitioner firm and therefore they cannot deny their relationship with the defaulting company and their liability to be proceeded under Section 88(3) of the Act. Merely because the petitioner resigned subsequently is of no anvil - There is no violation of principles of natural justice in attaching the bank accounts and the recovery proceedings have been validly initiated following the procedures laid down under Section 79 of the GST Act - The writ petitions are dismissed
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Kasi Viswanathan V

Weekly Summary

VIL Video

GSTAT Filing Near: Closing Resolutions...
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?