Case Law Details
Rishi Kant Jha Vs Union of India (Patna High Court)
In the case Rishi Kant Jha Vs Union of India, the Patna High Court addressed the liability of ex-directors concerning GST demands for transactions conducted after their resignation. The petitioners, former directors of M/s Atulya Ananya Advertising and Marketing Pvt. Ltd., contested a demand order issued against the company for April and May 2024, asserting their resignation on January 23, 2024, as per a board resolution. They argued that no demand could be levied against them individually. The court noted that the demand was raised in the company’s name and not specifically against the petitioners. Furthermore, the company itself was not made a party to the writ petition. The court held that the petitioners must establish their non-liability before the Assessing Officer, as the assessed transactions occurred after their resignation. With this clarification, the court dismissed the petition, emphasizing the need for the petitioners to address the issue through proper administrative channels. This decision underscores the principle that ex-directors are not automatically liable for a company’s tax obligations arising after their resignation, provided they can substantiate their case to the authorities.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
The petitioners are two individuals who challenge Annexure-P/1 order against one M/s Atulya Ananya Advertising and Marketing Private Limited, an assessment completed for the months of April, 2024 and May, 2024.
2. The petitioners’ contention is that they resigned from the Directorship of the Company as is evidenced by the resolution of the Board of Directors of the Company on 23.1.2024, produced as Annexure-P/3. The petitioners submit that there can be no demand raised against them.
3. As of now we do not see any demand having been raised against the petitioners as such, since the demand order is issued in the name of the Company. The Company, which is said to be continuing; as is presumed from the specific contention that the petitioners alone had resigned from the Directorship of the Company, has also not been made a party in the writ petition. It is for the petitioners to satisfy the Assessing Officer that the demand would not lie against the petitioners individually since the transaction on which the assessment is made, is after their resignation.
4. Leaving such liberty, the writ petition stands dismissed.
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