The main legal point established in the judgment is that a former director cannot be held personally liable for the tax liabilities of the company in the absence of a specific statutory provision.

JUDGMENT

Manmohan, J. - Petitioner, who is a former Director of respondent no.6-company (hereinafter referred to as ''assessee-company''), is aggrieved by the attachment of his personal bank account by respondent-Service Tax Authorities towards recovery of dues from the assessee-company under the Finance Act, 1994 (hereinafter referred to as the ''Finance Act'').

2. In the writ petition, it has been averred that the petitioner was appointed as an Additional Director of the assessee-company on 22nd August, 2014 and resigned in less than a year i.e. on 08th July, 2015.

3. It has further been averred that petitioner had agreed to his appointment as a Director in good faith and that too at the behest of his cousin, Mr. Ram Mohan Gupta, who was the founder Director of the assessee-company.

4. It is also stated in the writ petition that even prior to petitioner''s appointment as an Additional Director the assessee-company was under investigation by the anti-Evasion branch of Service Tax, Delhi-I, Commissionerate. Subsequent to petitioner''s resignation as a Director, a show cause notice dated 24th April, 2017 was issued to the assesseecompany and the same was decided vide Order dated 08th August, 2018 whereby the Commissioner, CGST, Delhi South Commissionerate, confirmed the demand and recovery of service tax along with interest and penalties against the assessee-company.

5. It is averred that the attested copy of the aforesaid order in original dated 08th August, 2018 was returned undelivered with the remark "refused" by the assessee-company and subsequently two demand notices dated 21st May, 2019 and 08th November, 2019 were issued to the assesseecompany through the petitioner in his capacity as its Director.

ARGUMENTS ON BEHALF OF PETITIONER

6. Ms. Pritha Srikumar Iyer, learned counsel for petitioner stated that, Mr. Ram Mohan Gupta, the founder Director of the assessee-company had signed an affidavit dated 22nd November, 2019 wherein he had admitted that it was at his request that the petitioner was inducted as an Additional Director and that the petitioner was not responsible for the dues of the assessee-company.

7. She further stated that even though the petitioner had clarified that he was not involved with the assessee-company since 08th July, 2015 vide his letter dated 26th December, 2019, yet the respondent no.1 had issued the impugned letter/attachment order dated 08th June, 2020 under Section 87(b)(i) of the Finance Act read with Section 174(1) of the Central Goods and Services Tax, 2017 (hereinafter referred to as the ''CGST Act'') for recovery of service tax determined against the assessee-company.

8. Learned counsel for the petitioner submitted that the impugned attachment order was beyond the purview of Section 87(b)(i) of the Finance Act as the said provision provides for a garnishee order i.e. attachment of funds of an assessee lying with third parties. According to her, the impugned attachment order was without jurisdiction inasmuch as there was no basis for proceeding against the petitioner personally while acting under Section 87(b)(i) of the Finance Act as there was no material to indicate that the funds in the petitioner''s personal bank account were due and payable to, or held on behalf of, the assessee-company.

9. She also submitted that there was no provision in the Finance Act making Directors personally liable for the tax liabilities of a company or empowering the respondent-authorities to recover such liabilities of the company from the personal assets of its Directors.

10. She emphasised that under the statutory scheme relating to Service Tax as provided under the Finance Act, no proceeding was ever initiated against the petitioner by issuing a show cause notice or otherwise and he was not even granted an opportunity to be heard before the impugned demand notices dated 21st May, 2019 and 08th November, 2019 or attachment order dated 08th June, 2020 were issued. She pointed out that even the show cause no