Madras HC Upholds GST Recovery From Director Under Section 88(3)

CBIGS Apparels and Jewels Vs Joint Commissioner (Madras High Court)

The Madras High Court disposed of three connected writ petitions challenging recovery proceedings initiated under Section 79(1)(c) of the GST enactments against bank accounts linked to CBIGS Apparels and Jewels, Mrs. N. Seetha, and Yantur Manufacturing Private Limited for recovery of GST dues payable by CBIGS Advertising Private Limited. The defaulting company had accumulated GST arrears of ₹3,66,42,318 for the tax period 2017–2018 after filing GSTR-1 but not GSTR-3B and had subsequently entered liquidation proceedings before the National Company Law Tribunal (NCLT).

The Court noted that CBIGS Advertising Private Limited had applied for winding up under Sections 271(e) and 272 of the Companies Act, 2013. The NCLT admitted the petition, appointed a provisional liquidator on 20.03.2024, and later appointed the same person as liquidator on 29.10.2025. The Court observed that the tax arrears remained recoverable from the company notwithstanding its liquidation.

The petitioners contended that the partnership firm and Yantur Manufacturing Private Limited were separate legal entities and that recovery proceedings against their bank accounts were impermissible merely because Mrs. N. Seetha had earlier served as a director of the defaulting company and had also been associated with those entities. They also challenged the attachment of bank accounts and referred to various factual circumstances, including changes in partnership, resignation from directorships, filing of GST returns, and the absence of dues payable by the partnership firm to the defaulting company. They further relied on Circular No. 129/48-2019-GST dated 24.12.2019 and a judgment in V N Mehta & Company vs Assistant Commissioner, HQ Preventive Unit, Chennai in support of their challenge.