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of <h1>Former company director wins challenge against tax recovery proceedings under Section 79 MGST Act 2017</h1> <h3>Prasanna Karunakar Shetty Versus State of Maharashtra, Commissioner of State Tax, Mumbai, State Tax Officer,</h3> Prasanna Karunakar Shetty Versus State of Maharashtra, Commissioner of State Tax, Mumbai, State Tax Officer, - TMI 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. 3The 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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