Director not personally liable for company tax arrears. Unauthorized recovery notice quashed. The court held that the recovery notice issued against the Director of a private limited company for sales tax arrears was unauthorized and illegal. The ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Director not personally liable for company tax arrears. Unauthorized recovery notice quashed.
The court held that the recovery notice issued against the Director of a private limited company for sales tax arrears was unauthorized and illegal. The Director was not personally liable for the company's tax liabilities, and the court restrained further recovery proceedings against him. However, the ruling did not prevent the revenue from pursuing recovery against the company or the Director if it is proven that he possesses the company's assets. Recovery actions against the company and its assets were permitted in accordance with the law. The writ petition was allowed with no costs awarded.
Issues involved: The issue involves the legality of enforcing recovery of sales tax arrears against a Director of a private limited company personally.
Summary: The petitioner, a Director of a private limited company, filed a writ petition seeking to prohibit the respondents from enforcing recovery of sales tax arrears against him personally. The sales tax amounting to Rs. 65,201.80 was due from the company for the year 1976-77. The petitioner contended that he is not the defaulter and cannot be proceeded against for the company's tax arrears. The court noted the absence of a counter-affidavit and accepted the petitioner's averments prima facie. The Government Pleader failed to provide any legal basis for proceeding against the petitioner personally for the company's tax liabilities. Consequently, the court held the recovery notice issued against the petitioner in his personal capacity as unauthorized and illegal, quashing the notice and restraining further recovery proceedings against him personally.
The judgment clarified that the ruling does not prevent the revenue from pursuing recovery against the company or the petitioner if it is proven that he possesses the company's assets. The revenue is also allowed to take recovery actions against the company and its assets in accordance with the law. The writ petition was allowed with no order as to costs.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
AI OCR ✕
of 
TaxTMI 
TaxTMI 
