Liability of directors of private company
Section 89, CGST Act
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Where a private company’s GST dues cannot be recovered, its directors during the relevant period are jointly and severally liable, unless a director proves the non-recovery was not due to any neglect or breach on his part.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Applies to directors of a PRIVATE company for dues of the period in which they held office, and only where recovery from the company fails.
The escape is proof that the non-recovery was not attributable to any gross neglect, misfeasance or breach of duty on that director’s part – a personal defence, so board minutes and resignation records matter.
It also reaches a private company converted into a public company, for the period when it was private.
Questions people actually ask
Real questions we get on this provision, answered straight.
I resigned as a director two years ago. Can I still be pursued?+
For dues of the period when you were in office, yes – but only after recovery from the company fails, and you can escape by showing the failure was not due to your neglect or breach of duty. Keep your resignation filing, the board minutes and evidence that compliance was in place while you served.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
1,232 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
Read the full provision+
(1) Notwithstanding anything contained in the Companies Act, 2013 (18 of 2013), where any tax, interest or penalty due from a private company in respect of any supply of goods or services or both for any period cannot be recovered, then, every person who was a director of the private company during such period shall, jointly and severally, be liable for the payment of such tax, interest or penalty unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.
(2) Where a private company is converted into a public company and the tax, interest or penalty in respect of any supply of goods or services or both for any period during which such company was a private company cannot be recovered before such conversion, then, nothing contained in sub-section
(1) shall apply to any person who was a director of such private company in relation to any tax, interest or penalty in respect of such supply of goods or services or both of such private company: Provided that nothing contained in this sub-section shall apply to any personal penalty imposed on such director.
High Court cases on this section
Judgments in our index that cite this provision. Being listed does not make a case good law — it may have been appealed or distinguished since. Read it before relying on it.
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2017-07-01 · Commenced
Provision as originally enacted in the CGST Act, 2017 (Act 12 of 2017) and brought into force w.e.f. 01-07-2017.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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