Since entities such as companies, firms or trusts, entities do not have a will of their own or the “culpable mental state” (for want of mental faculties), in case offences are committed by such entities it can be assumed that every person who is in-charge of the affairs of such entities, or is entrusted with the responsibility of administering or managing the affairs of these entities, is prime mover or the person who actually committed the offence that has been attributed to the said entity. Section 137 of the CGST Act recognizes the aforesaid assertion and provides that every person who was in-charge of or responsible to a company for the conduct of its business shall, along with the company itself, be liable to be proceeded against and punished for an offence committed by the company while such person was in-charge of the affairs of the company.
If any offence committed by the company:
• has been committed with the consent/connivance of, or
• is attributable to negligence of—
any officer of the company then such officer shall be deemed to be guilty of
the said offence and liable to proceeded against and punished accordingly.
The above provisions relating to any officer, director or manager, etc. of a company shall apply mutatis mutandis to the partner, managing partner, karta or trustee in the case of any offence is committed by a partnership, LLP, HUF, or trust, as the case may be.
The person charged with committing an offence while being an officer in-charge of, or responsible for the conduct of the business of, a company, partnership firm, LLP, HUF, or trust shall not be liable to be prosecuted if he is able to establish that:
• the offence was committed without his knowledge, or
• that he took all steps to prevent the commission of the offence. |
