The petitioner, who served as a director of Universeus Impex Pvt. Ltd. from March 2017 until his resignation in May 2019, contended that he had ceased to participate in the company's operations following the disqualification of his Director Identification Number (DIN) in November 2017. This disqualification resulted in the appointment of a new director in June 2018, and the petitioner formally resigned the following year.

Despite his exit from the company, the petitioner faced a tax recovery demand of over ?5.5 crore stemming from Goods and Services Tax (GST) liabilities confirmed in November 2020. Subsequently, in January 2024, the Maharashtra State GST Department issued orders to attach the petitioner’s residential property and a current account linked to his business, M/s. India Hair.

The primary argument presented by the petitioner centered on the illegitimacy of the attachment orders, asserting that they violated provisions of the Maharashtra Goods and Services Tax Act, 2017 (MGST Act). Specifically, the petitioner highlighted the lack of a show-cause notice prior to the issuance of the attachment orders. He contended that since he was no longer a director during the relevant period, there was no basis for the tax authority to recover dues from him.

On the contrary, the respondents defended their actions by citing the petitioner’s former directorship as justification for the attachment. They argued that the law allowed for recovery actions against directors for tax liabilities incurred during their tenure.

The court meticulously evaluated the arguments from both sides. It underscored that the MGST Act mandates a thorough verification process before initiating recovery actions against directors. The court noted that the respondent did not provide any tangible evidence to justify the attachment orders against the petitioner, nor did they issue a necessary show-cause notice to him.

Furthermore, the court emphasized the constitutional protections of the petitioner’s right to property, asserting that any such actions without proper procedure infringed upon Article 14 and Article 300A of the Constitution.

In its ruling, the court granted the petition in full, issuing a writ of certiorari to quash the attachment orders and directing the respondents to lift the attachments placed on the petitioner’s property and bank account. This decision serves as a crucial reminder of the importance of adhering to due process in tax recovery mechanisms, ensuring that individuals are not unjustly penalized for corporate liabilities from which they are no longer involved.

The ruling affirms that tax authorities must conduct due diligence and provide a fair opportunity for directors to contest actions that could significantly affect their personal assets. The court’s verdict not only rectifies the immediate grievances of the petitioner but also reinforces the principles of legal accountability and protection against arbitrary state action.