Up, close & personal amid liability shift

From GST and Fema to insolvency and money-laundering cases, regulators are increasingly holding executives and directors personally responsible, even as courts insist liability cannot rest on designation alone

- MONIKA YADAV

India’s senior executives, directors, and key managerial personnel (KMPs) are discovering that their corporate titles no longer guarantee them corporate cover against violations of the law — revenue authorities are insisting that what was once ‘company liability’ should now be treated as ‘personal liability’.

From the goods and services tax (GST) law and the Foreign Exchange Management Act (Fema) to the Companies Act, customs law, the Prevention of Money Laundering Act (PMLA) and insolvency proceedings, enforcement agencies are increasingly moving to hold individuals, rather than just the institution, responsible for alleged financial misconduct, tax evasion, and compliance failures.

The trend came into sharp focus on February 27, 2026 with the arrest of Rishi Gupta, managing director and chief executive officer (CEO) of Fino Payments Bank, in a GST evasion case involving its programme managers-a reminder that the top of the corporate pyramid is not beyond scrutiny.

In the GST domain, a ₹400 crore personal penalty was levied on February 1, 2025, by authorities on three senior executives of movie production and distribution company Shemaroo Entertainment Ltd CEO Hiren Uday Gada, CFO Amit Manilal Haria, and Joint Managing Director Atul Hirji Maru-for alleged wrongful availment and passing on of input tax credit (ITC) between FY18 and FY22 under Section 122 (1A) of the CGST Act.

However, in this particular case, the Bombay high court set aside and quashed this penalty, ruling that corporate employees acting in their official capacity are not "taxable persons" under the law and cannot be held personally liable under this section.