In a recent ruling, the High Court of Patna held that the demand order issued post resignation of directors lies against the company and not against the ex-directors.
In this case, the petitioners, Rishi Kant Jha and Khushboo Kumari, are the ex-directors of a company. The contention raised by the petitioner is that the GST demand order concerning a company named M/s Atulya Ananya Advertising and Marketing Private Limited issued for the months of April and May 2024 was inapplicable to them as individuals.
It was submitted by the petitioners that they had resigned as directors of the company on 23-01-2024, as confirmed by a board resolution. It was contended by the petitioners that the assessment should be directed only at the company, as they had resigned before the assessment proceedings took place.
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Thus, the petitioners argued that there could be no demand raised against them as they were no longer legally affiliated with the company.
The High Court bench observed that “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 court was of the view that the demand order was issued in the company’s name, and was not issued against the individual petitioners. As the company continued to be in operation, the court observed that the company itself was not a party in the writ petition.
Therefore, the court suggested that the petitioners address their concerns with the assessing officer ( AO ) to demonstrate that the transactions underlying the assessment were conducted after their resignation.
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The Patna High Court bench, comprising Chief Justice K. Vinod and Justice Partha Sarthy, dismissed the writ petition filed by the petitioners, leaving it open for the petitioners to further contest their liability with the AO if necessary.
The petitioner was represented by Mr. G.K. Jha, Mr. S.K. Jha, and Mr. Santosh Kumar Jha, and the respondents were represented by Dr. K.N. Singh, Mr. Alok Kumar, Mr. Devansh Shankar Singh, and Mr. Shivaditya D. Sinha.
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