212.
ABC
Pvt
Ltd, a private company, supplier of toughened glass is currently running in
losses & has the following liabilities for the period 1.1.2017-30.4.2017:
Tax:
2 lacs
Interest:
25,000
Penalty:
1 lacs
Discuss
the taxability for such dues if:
i.
A
is director on 1.5.2017
ii.
B,
director of company, resigned on 15.12.2016
iii.
C,
director of company, resigned on 15.3.2017
iv.
D,
director of company, proves that there was no negligence/ misfeasance/ breach of
duty on his part in relation to affairs of company
v.
E
was appointed as director on 1.2.2017
vi.
F
was appointed as director of company on 1.6.2017
As
per section 89(1) of the CGST Act, where any tax, interest or penalty due from a
private company in respect 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 severraly, be liable for the payment of such tax,
interest and penalty unless he proves that the non-recovery cannot be attributed
to any gross neglect, misfeansance or breach of duty on his part in relation to
the affairs of the company. In the given example all the directors of the company during
the relevant period shall be jointly & severally liable to pay Tax/ Interest/ Penalty
which is due in respect of
any supply of goods/ services/ both. Thus total liability of Rs. 3, 25, 000
(Tax: 2 lacs + Interest: 25,000 + Penalty: 1 lacs) shall be payable by the following directors:
(a)
A is jointly & severally liable to pay Rs. 3,25, 000
(b)
B left the company before the tax liability arose, thus, he is not liable to
pay such tax liability.
(c)
C was the director of the company during the period when tax liability has
arisen. Thus, he is jointly & severally liable.
(d)
D is not liable as there was no negligence/ misfeasance/ breach of duty on his
part in relation to affairs of company
(e)
E
was appointed as director on 1.2.2017. The tax liability arise for the period
1.1.2017-31.4.2017. Since he was director during relevent period, thus,
he is jointly & severally liable.
(f)
F
was appointed on 1.6.2017 & tax was due for period before his appointment.
Thus, F is not liable for tax which was due before his appointment.