Rishi Kant Jha Vs Union of India
Date: October 28, 2024
Court: High Court
Bench: Patna
Type: Writ Petition
Subject Matter
Ex-directors are not automatically responsible for a company’s tax obligations formed after they have left their positions, as long as they can provide sufficient evidence to support their claims
Summary
In the Patna High Court case of Rishi Kant Jha Vs Union of India, the court examined the GST liabilities of ex-directors of M/s Atulya Ananya Advertising and Marketing Pvt. Ltd. The former directors contested a GST demand order for the months of April and May 2024, asserting their resignation on January 23, 2024. They claimed that they could not be personally liable for the company's GST obligations incurred after their departure. The court highlighted that the demand was issued against the company and not the individuals directly and noted that the company itself was not part of the writ petition. The court ultimately dismissed the petition and emphasized that the petitioners must demonstrate their non-liability to the Assessing Officer, considering that the transactions in question occurred after their resignation. The decision reinforces the principle that ex-directors are not automatically responsible for a company’s tax obligations formed after they have left their positions, as long as they can provide sufficient evidence to support their claims.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
The petitioners are two individuals who challenge Annexure-P/1 order against one M/s Atulya Ananya Advertising and Marketing Private Limited, an assessment completed for the months of April, 2024 and May, 2024.
2. The petitioners’ contention is that they resigned from the Directorship of the Company as is evidenced by the resolution of the Board of Directors of the Company on 23.1.2024, produced as Annexure-P/3. The petitioners submit that there can be no demand raised against them.
3. As of now we do not see any demand having been raised against the petitioners as such, since the demand order is issued in the name of the Company. The Company, which is said to be continuing; as is presumed from the specific contention that the petitioners alone had resigned from the Directorship of the Company, has also not been made a party in the writ petition. It is for the petitioners to satisfy the Assessing Officer that the demand would not lie against the petitioners individually since the transaction on which the assessment is made, is after their resignation.
4. Leaving such liberty, the writ petition stands dismissed.