Section 89 LIABILITY OF DIRECTORS OF PRIVATE COMPANY [SECTION 89 OF THE CGST ACT - GST Ready Reckoner - GST

LIABILITY OF DIRECTORS OF PRIVATE COMPANY [SECTION 89 OF THE CGST ACT] Director of a private company to be jointly and severally liable for the payment of any tax, interest or penalty due from the company not recovered: 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(1) ]. if such private company gets converted into a public company Director not jointly and severally liable for the payment of any tax, interest or penalty due from a private company not recovered, 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, 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. Nothing contained in provision of this section shall apply to any personal penalty imposed on such director [ Section 89(2) ]. Example 1: say, XYZ Pvt. Ltd. Incorporated on 1st Jan, 2015 and converted into a public company on 7th Aug, 2017 then, for the tax, interest or penalty in respect of any supply of goods or services or both for any period during 1st Jan, 2015 to 6th Aug, 2017 who will be held liable. Answer 1) any person who was the director before such conversion, nothing contained in sub section (1) shall apply to any person who was a director of such XYZ Pvt. Ltd. Co. in relation to any tax, interest or penalty in respect of such supply of goods or services or both .( Section 89(2 ))