Director of the company is liable for default of tax that occurred when he was director even if he resigned from the post thereafter.

Facts: The petitioner is an Ex – Director of M/s. Proplarity Infratech Private limited which deals in real estate. The company was established by petitioner and two other directors. As a result of personal dispute, the petitioner resigned from Directorship of the said company on 12 December 2016. The business was continued by other two directors who divested the petitioner from signing authority in bank accounts of company. The petitioner filed this writ petition for protection of arrest in case of enquiry proceedings initiated by DGGI for alleged evasion of service tax in terms of Rule 89(1)(ii) of the Finance Act, 1994 read with section 174 of the CGST Act,2017.

Held: The Hon’ble Allahabad High Court after hearing the submissions of both the petitioner and respondent held that no case is made in favour of the petitioner to pass nay order prohibiting his arrest, if the same has to be carried out in accordance with the provisions as provided under the Finance Act. The Interim order if any shall stand vacated and writ petition is accordingly dismissed.

To read the complete judgment 2018 Taxo.online 594