Director liability for company GST arrears requires statutory conditions and a fair hearing before bank account attachment.

Directors cannot be fastened with a company's GST arrears merely by virtue of office unless the statutory conditions for director liability are met, including proof that non-recovery was attributable to gross negligence, misfeasance or breach of duty. The Court also treated the absence of an effective pre-decisional hearing as material, since the petitioners were entitled to explain why the dues could not be recovered from them and to file supporting materials. The recovery action attaching the directors' bank accounts was therefore set aside and the matter remitted for fresh consideration after hearing the petitioners.

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Issues: Whether the petitioners, being directors of the company, could be proceeded against for the company's GST arrears by attaching their bank accounts without prior notice and whether the matter required reconsideration under the conditions governing director liability.

Analysis: The challenge was directed against recovery notices attaching the petitioners' bank accounts for the tax dues of the company under liquidation. The Court held that the petitioners could not be mulcted with liability towards tax, penalty, or interest merely because they were directors, unless the statutory conditions governing director liability were satisfied. It further held that the petitioners must be given an opportunity to explain why the dues could not be recovered from them and to place materials showing that non-recovery was not attributable to their gross negligence, misfeasance, or breach of duty. The absence of an effective hearing before the impugned action supported a fresh consideration by the authority.

Conclusion: The impugned recovery action was set aside for reconsideration, and the matter was remitted to the first respondent to pass a fresh order after hearing the petitioners and considering their representation and supporting materials.

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