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of <h1>Court rules directors not personally liable for sales tax arrears; liability only during liquidation.</h1> <h3>Ramnarayan Shahu Versus Commercial Tax Officer (FAC)</h3> Ramnarayan Shahu Versus Commercial Tax Officer (FAC) - [1990] 78 STC 97 (AP) Issues Involved: The judgment addresses the issue of recovery of arrears of sales tax from directors of a private limited company u/s 16-B of the Andhra Pradesh General Sales Tax Act, 1957.Details of the Judgment:Issue 1: Recovery of Arrears of Sales Tax from DirectorsThe writ petitions were filed against the order of the Commercial Tax Officer demanding recovery of arrears of sales tax from the directors of a private limited company. The petitioners argued that u/s 16-B of the Andhra Pradesh General Sales Tax Act, recovery from directors can only be made during the liquidation process of the company. The Court referred to section 16-B which states that directors are liable for tax payment only in case of liquidation, unless they can prove non-recovery is not due to their neglect. The Court quashed the order for recovery against the directors and issued a writ of mandamus to restrain further action. W.P. No. 18277 of 1988 was allowed with no costs.Issue 2: Withdrawal of Petition by the CompanyThe counsel for the petitioner-company requested to withdraw W.P. No. 18168 of 1988. The Court granted the withdrawal and dismissed the petition with no costs. It was clarified that there is no impediment to recovering tax from the private limited company itself.In conclusion, W.P. No. 18277 of 1988 was allowed, restraining recovery from directors, while W.P. No. 18168 of 1988 was dismissed as withdrawn.
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