Can the Directors of Companies be Held Liable for Recovery of Taxes?

financialexpress.com:

The tax authorities have historically had difficulty in collecting arrears of taxes from defaulters. If the company files for bankruptcy, loses its ability to pay or becomes untraceable,  the recovery process becomes even more challenging. When it comes to GST, it’s important to keep in mind that the money owed by the Company, which is due to the Government, may already be collected from the final customer. As a result, there should not be any exemption from punishment for any gross neglect or misfeasance in relation to the affairs of the company.

Section 89 of the Central Goods and Services Tax Act, 2017 discusses the joint and several personal liabilities of the Directors of a Private Company where any tax, interest, or penalty cannot be recovered. Here, it is the Directors’ responsibility to provide evidence that they were not at fault for the companies’ tax default. Additionally, Section 89 begins with a non-observant clause, i.e. the provision supersedes anything provided in the Companies Act. Therefore when it comes to the recovery of GST, the idea that a corporation is a separate legal entity as provided in the Companies Act instantly becomes eroded.  

Under the GST laws, the recovery of taxes is contemplated on the person who makes a taxable supply. Therefore, such liability should ideally be fastened on the Company as a whole and not on a person by virtue of his fiduciary position as a Director, unless proven otherwise.

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It is interesting to note that there is no other provision that fixes liability on a Director with respect to the tax dues of a public company. In the absence of a provision to this effect, can it be said that no liability can be