Director liability under GST requires director to prove absence of gross neglect; bank attachment set aside pending fresh adjudication.

Section 89(1) assigns liability to persons who were directors of a private company where the company's GST dues remain unrecovered, while placing the evidential burden on the director to prove the non-recovery is not due to gross neglect, misfeasance or breach of duty; an attachment effected without adjudication on that burden requires the adjudicating authority to reconsider the matter on merits after affording the director opportunity to file a reply and lead evidence, and the earlier recovery notice and bank attachment were set aside for fresh adjudication.

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Issues: Whether the recovery notice in Form GST DRC-13 attaching the bank account of a director can be sustained under Section 89 of the respective GST enactments and whether the director bears the burden to prove that non-recovery of tax cannot be attributed to gross neglect, misfeasance or breach of duty.

Analysis: Section 89(1) places liability on every person who was a director of a private company where tax due from the company cannot be recovered, subject to the director proving that the non-recovery is not attributable to gross neglect, misfeasance or breach of duty. The statutory scheme thus allocates the evidential burden to the director to demonstrate absence of such culpable conduct. Where an attachment has been effected without a determination on the director's discharge of that burden, the matter requires reconsideration by the adjudicating authority on merits with opportunity to the director to file a reply and lead evidence addressing the statutory criteria.

Conclusion: The recovery notice in Form GST DRC-13 attaching the director's bank account is quashed and the matter is remitted to the first respondent to pass a fresh order on merits after affording the director an opportunity to discharge the burden under Section 89(1) of the respective GST enactments.

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