Limited-liability co-operative members cannot be coerced to pay society tax dues absent express statutory authority.

Members of a registered co-operative society with limited liability cannot be proceeded against for the society's sales tax dues by attachment and sale of their properties, arrest, or other coercive recovery, unless a statute expressly authorises such recovery. The Court treated the society as a distinct juristic entity and held that members' liability remains confined to their undertaking, ordinarily enforceable against the society while it is a going concern or against the liquidator on winding up. Section 67 of the Punjab Co-operative Societies Act, 1961 was confined to amounts due to Government under that Act and did not extend to sales tax dues. The members were therefore protected from coercive recovery.

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Issues: Whether sales tax assessed against a co-operative society could be recovered from its members by attachment and sale of their properties or by arrest; and whether the limited liability of members of a registered co-operative society protected them from such coercive recovery.

Analysis: The society was a registered co-operative society with limited liability of members. The Court held that members of such a society cannot be made liable for the debts of the society beyond the extent of their undertaking, and that this liability is ordinarily enforceable against the society while it is a going concern or against the liquidator upon winding up. The only statutory exception relied upon was section 67 of the Punjab Co-operative Societies Act, 1961, which permits recovery from members only of amounts due to the Government under that Act. Sales tax levied on the society was not an amount due to Government under the Punjab Co-operative Societies Act, 1961. The Court further applied the principle that an incorporated body is a distinct juristic entity and that the liability of its members or shareholders does not extend to the entity's tax dues, except where statute expressly so provides.

Conclusion: The members of the co-operative society were not liable for payment of the society's sales tax dues, and no recovery could be made from them by attachment and sale of their properties, by arrest, or by any other coercive method.

Final Conclusion: The challenge succeeded only to the extent of protecting the members from coercive recovery of the society's sales tax liability, while other reliefs were declined and the petitioners were left to pursue remedies under the Act.

Ratio Decidendi: Members of a limited-liability co-operative society cannot be proceeded against for the society's tax dues by coercive recovery unless a statute expressly authorises recovery from them.

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