Directors' personal liability for company tax arrears requires express statutory authority; recovery from directors was invalid.

A company is a separate legal entity, so its sales tax arrears must ordinarily be recovered from the company and its assets, not from its directors. Provisions dealing with liability in cases such as a partitioned Hindu family, a dissolved firm, or a private company on winding up do not extend to imposing personal liability on directors for company tax dues. In the absence of an express statutory provision creating such liability, recovery proceedings against the directors for the company's sales tax arrears cannot be sustained and were set aside.

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Issues: Whether arrears of sales tax due from a company can be recovered from its directors in the absence of a specific statutory provision.

Analysis: A company is a legal entity distinct from its directors and shareholders. Liability for tax dues of the company must ordinarily be enforced against the company and its assets. The provisions relied upon by the revenue, namely the provisions relating to liability of a partitioned Hindu family, dissolved firm, and private company on winding up, do not extend to fastening personal liability on directors for company dues. In the absence of an express provision creating such liability, proceedings against the directors for recovery of the company's sales tax arrears cannot be sustained.

Conclusion: The recovery proceedings against the directors were held to be invalid and were set aside.

Ratio Decidendi: Directors of a company cannot be proceeded against personally for recovery of the company's tax arrears unless the statute expressly creates such liability.

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