Directors of Liquidated Company Not Liable Under CGST Act for Pre-GST Dues

Case Details:

• Case Title: Ravindra Muthavarapu & Ors. v. Superintendent of Central Tax & Ors.

• Court: High Court of Andhra Pradesh, Amaravati

• Petition No.: WP(C) Nos. 17995, 17997, 18001, 18018, 18019 & 18024 of 2024

• Category of Dispute: Recovery Proceedings – Director’s Personal Liability

• Date of Judgment: 09 April 2025

• Relevant Sections: Section 88 and Section 174 of CGST Act, 2017; Central Excise Act, 1944

Between Fine Lines (Simplified Outcome in 5 Lines):

1. The petitioners were former directors of M/s Kusalava Batteries Pvt. Ltd., which was liquidated.

2. Tax authorities sought to recover ₹39+ crore excise dues (pre-GST) from directors using CGST Act provisions.

3. The Court held CGST Act’s Section 88 applies only to dues under the CGST Act—not to excise dues.

4. Recovery of such dues must follow the machinery provisions of the Central Excise Act, 1944.

5. The writs were allowed; recovery notices under CGST Act were quashed.

Facts of the Case:

[Para 2-6]

• M/s Kusalava Batteries Pvt. Ltd. was liquidated, leaving tax dues and penalties under the Central Excise Act, 1944 amounting to ₹39.02 crore.

• The petitioners, all former directors, were served notices (OC No. 127/2024 dated 24.07.2024) by GST authorities under Section 88 of CGST Act.

• In two cases (WP Nos. 17997 & 18024), additional personal penalty of ₹1.3 crore was imposed.

• Petitioners challenged the jurisdiction of the authorities under CGST Act to recover pre-GST dues.

Questions in Consideration:

[Para 7-9]

1. Can tax dues under the Central Excise Act, 1944 be recovered from directors under Section 88 of CGST Act?

2. Does Section 174 of CGST Act permit recovery of such legacy dues using CGST provisions?

3. Were the impugned notices issued without jurisdiction and in violation of principles of natural justice?

Observations of Court:

[Para 11-15]

• Section 88(3) CGST Act makes directors jointly and severally liable only for dues “determined under this Act” (i.e., CGST Act).

• Dues under the repealed Central Excise Act cannot be recovered using CGST provisions.

• Section 174(2)(e) & (f) of CGST Act clearly mandates that recovery and appeals under repealed laws must continue under those respective laws.

• Therefore, recovery of excise dues must be pursued under the Central Excise Act and not under CGST.

Judgment of the Court:

[Para 16-17]

• Writ Petitions were allowed.

• Notices issued under Section 88 CGST Act were quashed.

• Authorities are at liberty to take action under the Central Excise Act if permissible.

• No costs awarded.

Summary of Referred Cases:

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