Director personal liability for company tax arrears arises only under statutory conditions, not before winding up or liquidation.

Section 16-B of the Andhra Pradesh General Sales Tax Act fastens a director's personal liability for a private company's sales tax arrears only when the company is wound up and the assessed tax cannot be recovered in liquidation. In the absence of winding up or liquidation, the statutory preconditions are not met, so the director's personal assets cannot be proceeded against merely because the company owes tax. The notice threatening recovery from the director's personal properties was therefore without authority of law and invalid.

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Issues: Whether the revenue authorities could proceed against the personal properties of a director of a private limited company for recovery of sales tax arrears due from the company without the company being wound up or placed in liquidation.

Analysis: Section 16-B of the Andhra Pradesh General Sales Tax Act, 1957 creates a special liability of directors of a private company only when the company is wound up and the tax assessed on the company cannot be recovered in liquidation. In the absence of winding up or liquidation, the statutory conditions for fastening personal liability on the director do not exist. A director's personal assets cannot therefore be proceeded against for the company's tax dues merely because the company is in arrears. Recovery must conform to the limited liability framework and the specific statutory mechanism.

Conclusion: The notice threatening recovery from the director's personal properties was without authority of law and invalid. The issue is answered in favour of the assessee/petitioner.

Ratio Decidendi: Personal liability of a director of a private company for sales tax arrears can be invoked only in the manner and on the conditions specifically provided by statute, and not before the company is wound up or liquidation has commenced.

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