Tax arrears recovery cannot extend personal liability to directors absent express statutory provision, while third-party claims need protective execution procedure.

A statutory direction that tax arrears may be recovered "as if it were a fine" is only an execution mechanism and does not create substantive personal liability for a company's directors absent express legislative authority. The company remains a separate legal entity, and recovery of its sales tax dues cannot be pursued against directors merely by relying on provisions dealing with offences or penalties. The text also notes that, where no rules exist under section 421(2) of the Code of Criminal Procedure, a protective summary procedure may be adopted in execution of a warrant to safeguard third-party claims to attached movable property through notice, opportunity to be heard, and short interim protection until rules are framed.

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Issues: (i) Whether arrears of sales tax recoverable from a company under section 13(3)(b) of the Karnataka Sales Tax Act, 1957 could be recovered personally from its directors; (ii) Whether, in execution of a warrant under section 421(1)(a) of the Code of Criminal Procedure, 1973, a third-party claim to attached movable property required a summary protective procedure in the absence of rules under section 421(2) of that Code.

Issue (i): Whether arrears of sales tax recoverable from a company under section 13(3)(b) of the Karnataka Sales Tax Act, 1957 could be recovered personally from its directors.

Analysis: The amount recoverable under section 13(3)(b) is the tax assessed or other amount due under the Act. The reference in clause (b) to recovery "as if it were a fine" is only a procedural device for execution and does not convert the tax arrears into a fine in substance. The personal liability of directors under sections 29 and 31A operates in the context of offences and penalty under those provisions, and cannot be extended to recovery of company tax arrears under section 13(3)(b). The company remains a distinct legal entity, and no provision in the Act authorises recovery of its sales tax arrears from directors personally.

Conclusion: The directors cannot be proceeded against personally for recovery of the company's sales tax arrears; the impugned recovery order was unsustainable.

Issue (ii): Whether, in execution of a warrant under section 421(1)(a) of the Code of Criminal Procedure, 1973, a third-party claim to attached movable property required a summary protective procedure in the absence of rules under section 421(2) of that Code.

Analysis: Section 421(2) contemplates rules regulating execution of warrants and summary determination of claims by persons other than the offender. Since no such rules had been framed, the Court indicated a temporary procedure to protect third-party rights and to give effect to natural justice, including a short stay of sale, notice to the claimant, an opportunity to adduce evidence, and summary determination by the issuing court. The directions were framed as an interim measure until the State framed the requisite rules.

Conclusion: A protective summary procedure was directed to operate until rules are framed under section 421(2) of the Code of Criminal Procedure, 1973.

Final Conclusion: The recovery order against the directors was set aside, and the petition was allowed, with directions to safeguard third-party claims in execution proceedings until the State frames appropriate rules.

Ratio Decidendi: A statutory fiction that allows tax arrears to be recovered "as if it were a fine" creates only a method of execution and does not extend substantive liability to directors unless the taxing statute expressly provides for such personal liability.

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