Liability of Company in liquidation under GST
In case where a company, being a taxable person goes into liquidation or is being wound up and there are unpaid tax dues determined before or after such liquidation, every person who was a director of the company during the period for which the tax was due, shall jointly and severally be liable for payment of dues unless he proves to the satisfaction of the Commissioner that such non-recovery is not attributed to any gross neglect, misfeasance or breach of duties on his part in relation to the affairs of the company.
For the purpose of understanding ‘company’ in liquidation, company means the company as defined in section 2 (20, 68) of the Companies Act, 2013. Accordingly, a ‘company’ means a company incorporated under theCompanies Act, 2013 or any previous company law. A company maybe a company limited by shares or by guarantee. A company is incorporated under section 3 of the Companies Act, 1956.
In case of company under liquidation, every person appointed by an order of the Court/Tribunal as receiver of any assets of a company (liquidator) shall within thirty days of his appointment, give intimation of his appointment to the Commissioner. Commissioner to notify the liquidator within 3 months from the date on which he receives intimation of the appointment of the liquidator, the amount of tax, interest or penalty which is payable by the company.
While every person who was a director of company during the period of liability, independent directors who are not involved in affairs of the company and are able to prove that non-recovery can not be attributed to gross neglect, misfeasance or breach of duty on their part, may not be liable for recovery from them.
Chapter XXII of the Model GST Law contains Chapter XXII comprising of sections 108 to 115 which deal with liability to pay GST in eight special cases as follows :
Section
| Liability |
108 | Liability in case of transfer of business |
109 | Liability in case of amalgamation / merger of companies |
110 | Liability in case of company in liquidation |
111 | Liability of partners of firm to pay tax |
112 | Liability of guardians, trustees etc |
113 | Liability of Court of Wards etc. |
114 | Special provision regarding liability to pay tax in certain cases (death, discontinued business, hindu undivided family or association of persons, on partition, dissolution of firm, termination of guardianship or trust etc). |
115 | Liability in other cases (discontinued business of HUF, firm, AOP; change in constitution of firm or AOP etc.) |
Free Education Guide on Goods & Service Tax (GST)