The Madras High Court set aside a recovery notice issued under Section 89 of the CGST Act against a director whose bank account was attached for the tax dues of his private company.
In this matter, the petitioner assailed a recovery notice issued in Form GST DRC–13, pursuant to which his personal bank account was attached for the recovery of tax dues owed by M/s. Trans Car India Private Limited. The petitioner was a Director of the said company, which had been subjected to an adverse order. The company had earlier challenged the Order-in-Original before the High Court.
Thereafter, the department initiated recovery proceedings by issuing the impugned DRC–13 notice and attaching the petitioner’s personal bank account, invoking Section 89 of the GST enactments. The petitioner argued that such action was not in accordance with Section 89 and that recovery from a Director in a personal capacity is not automatic.
While the respondents claimed that the tax dues stayed unpaid via the company and that u/s 89, a Director of a private company is jointly and severally obligated where dues cannot be recovered from the company.
Whether the personal bank account of a Director of a private company can be attached for the company’s GST dues recovery u/s 89 of the GST enactments, without allowing the Director to release the burden cast under the provision.
The Court analysed Section 89 of the GST enactments and said that where tax, interest, or penalty due from a private company could not be recovered, every individual who was a Director in the pertinent duration shall be jointly and severally obligated. But the same obligation is not automatic or absolute.
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The provision puts a burden on the director to establish that the non-recovery could not be attributed to any gross neglect, misfeasance, or violation of duty on his end concerning the affairs of the company.
The Court mentioned that the applicant should be furnished with a chance to release the statutory burden u/s 89(1). Direct recovery by attachment of the Director’s bank account could not be sustained in the lack of the same opportunity.
As per that, the impugned recovery notice on 25.11.2025 in Form GST DRC–13 was quashed. The case was remitted back to the first respondent to pass a fresh order on the merits within 2 weeks. The applicant was asked to submit a response elaborating on why the recovery could not be incurred against him for the tax obligation of the company.
| Case Title | Khalid Buhari vs. Assistant Commissioner of CGST |
| Case No. | WP No. 50484 of 2025 and WMP.Nos.56526 & 56527 of 2025 |
| For Petitioner | Mr.T.V.Lakshmanan, Mr Su. Srinivasan, Mr C.Mohan, M/s.A.Rexy Josephine Mary |
| Madras High Court | Read Order |
