Chukkapalli Chakravarthi vs. The Superintendent Of Central Tax

Held

The Court held that Section 88(3) of the CGST Act, 2017, specifically pertains to the recovery of tax, interest, or penalty determined under the CGST Act from the directors of a private company in liquidation. This implies that such recovery from directors is limited to liabilities arising under the CGST Act alone. Regarding liabilities arising under the Central Excise Act, 1944, the Court referred to Section 174 of the CGST Act. Section 174(2)(e) preserves the right to continue or enforce recovery of arrears or remedies in respect of duties, taxes, penalties, etc., arising under the repealed Acts, implying that such recovery should be pursued using the mechanisms provided by the repealed Acts. Therefore, the provisions of the CGST Act are not available for recovering dues assessed under the Central Excise Act, 1944. The Court allowed the Writ Petitions, setting aside the impugned notices, but left it open for the respondents to pursue remedies available under the Central Excise Act, 1944, if permissible.

Facts

The petitioners, former directors of a liquidated company, M/s. Kusalava Batteries Private Limited, received notices from the Superintendent of Central Tax demanding payment of dues owed by the company. These dues arose from orders passed under the Central Excise Act, 1944. The company's taxes and penalties could not be recovered during liquidation. The notices were issued under Section 88 of the Central Goods and Services Tax (CGST) Act, 2017, asserting the directors' liability for the company's dues. The petitioners challenged these notices, arguing that Section 88 of the CGST Act could not be used to recover dues assessed under the Central Excise Act, 1944. Some petitioners also sought relief against orders-in-original passed under the 1944 Act, but this relief was later withdrawn.

Key Issues

1. Whether Section 88 of the CGST Act, 2017, can be invoked for the recovery of taxes, interest, or penalties that were assessed or levied under the Central Excise Act, 1944, from the directors of a liquidated private company? (Question of law) Petitioner's arguments: The petitioners contended that Section 88 of the CGST Act, when read in conjunction with Section 174 of the CGST Act, clearly indicates that recovery under Section 88 is permissible only for taxes and amounts assessed or levied under the CGST Act itself. They argued that Section 174(2)(e) and (f) mandate that dues under the Central Excise Act, 1944, must be recovered using the machinery available under that Act. Therefore, the impugned notices, seeking recovery of dues under the 1944 Act via the CGST Act, are invalid. Respondent's arguments: The respondents argued that the Writ Petitions were not maintainable as the petitioners had an alternative remedy of appeal. They further contended that Section 88 of the CGST Act could indeed be used for the recovery of dues under the Central Excise Act, 1944. They also stated that the notices were not for recovery but for ascertaining misfeasance and that submissions could be made before the authority.