Attachment of directors’ personal bank accounts for company’s dues during liquidation unjustified as recovery lies against company { N. Ramkhuar Narasimhan vs. Assistant Commissioner (ST) [2026] 183 taxmann.com 110 (Madras)}
Facts
- A private company went into liquidation and a liquidator took control of its affairs.
- During liquidation, GST dues (interest & penalty) arose in the company’s name.
- The department attached the personal bank accounts of the directors to recover those dues.
- Directors contended that:
- They were not managing the company anymore,
- The company was under the exclusive control of the liquidator,
- Hence personal recovery was illegal.
Issue
Whether the GST department can recover company’s tax dues by attaching directors’ personal bank accounts when the company is under liquidation.
Held
- No. Recovery must be against the company only.
- Once a company is under liquidation, liability lies with the company and its assets, not the directors personally.
- Directors cannot be treated as personally liable unless specific statutory conditions are met.
- Therefore, attachment of personal bank accounts was unjustified and liable to be vacated.
- Directors were allowed to seek relief to extricate themselves from liability.
