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2024 (4) TMI 779 - HC - GSTRecovery of tax arrears from the Former director of the Company - Attachment of Bank accounts - DIN of the petitioner got disqualified under Section 164(2)(a) of the Companies Act, 2013 - HELD THAT - A bare reading of section 79 of the Maharashtra Goods and Service Tax Act, 2017 (MGST Act) would bring about a cumulative effect that the principal liability is not on the petitioner who is not a registered person within the meaning of Section 79(1). Further Section 89 clearly provides that before taking any action of recovery against the directors of the company, a subjective satisfaction is required to be achieved by the concerned officer in regard to whether a person concerned against whom recovery is sought to be made was a director of a Private Limited Company for the concerned period. It is only after such satisfaction to the effect that such person was the director of the company, the liability could be fastened against such director - there is no manner of doubt that the impugned order passed against the petitioner is illegal and cannot be sustained. It is certainly in breach of the rights guaranteed to the petitioner under Article 14, read with Article 300A, of the Constitution. The attachments are lifted - petition allowed.
Issues Involved:
1. Legality of the attachment order and notice issued by Respondent No. 3. 2. Petitioner's liability under Section 79 and Section 89 of the Maharashtra Goods and Service Tax Act, 2017 (MGST Act). 3. Violation of the petitioner's rights under Articles 14 and 300A of the Constitution. Summary: Issue 1: Legality of the attachment order and notice issued by Respondent No. 3 The petitioner sought a Writ of Certiorari u/s Article 226 of the Constitution to quash and set aside the Order of Attachment No. STO/MUM-BCP-C-005 (Kurla-701)/Recovery/Attachment/2018-19/2023-24/B-323 dated 11.01.2024 and the notice to IndusInd Bank for attaching the petitioner's current account. The petitioner argued that no show cause notice was issued, and he was not a director during the relevant period. Issue 2: Petitioner's liability under Section 79 and Section 89 of the MGST ActThe petitioner contended that the impugned order was contrary to Section 79, read with Section 89, of the MGST Act, as he had ceased to be a director before the period in question. The court observed that the principal liability is not on the petitioner, who is not a registered person within the meaning of Section 79(1). The court emphasized that Section 89 requires subjective satisfaction by the concerned officer regarding the petitioner's directorship during the relevant period before fastening liability. Issue 3: Violation of the petitioner's rights under Articles 14 and 300A of the ConstitutionThe court found substance in the petitioner's contention that the orders directly affected his right to property guaranteed under Articles 14 and 300A of the Constitution. The court noted that no show cause notice was issued, and the petitioner was not heard before the orders were passed, which was a breach of his constitutional rights. Conclusion:The court allowed the petition, quashing the impugned attachment orders and notices. The court directed the respondents to withdraw/cancel the attachment order and lift the attachment from the petitioner's flat and current account. The petition was allowed with no costs.
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