Separate legal personality bars recovery of company tax arrears from a retired director's personal property absent statutory liability.

Tax recovery for a company's arrears cannot be enforced against a third party's personal property unless the statute expressly fastens such liability. Applying the principle of separate legal personality, the Madras HC held that a company's tax dues must ordinarily be recovered from the company itself, not from a director merely because of former association. The petitioner, a retired director with no connection to the business liability, could not be proceeded against for the assessee-companies' sales tax arrears. The recovery notices attaching his property were therefore unsustainable and were set aside, while recovery against the assessee-companies was left open in accordance with law.

---

---

Issues: Whether the property of a retired director could be attached for recovery of sales tax arrears due from the assessee-companies and whether the impugned recovery notices were sustainable.

Analysis: The statutory recovery could be pursued against the assessee liable for the tax, but not against a third party who had no connection with the business or liability of the assessee. A company is a separate legal entity, and tax dues payable by it must ordinarily be recovered from the company itself. On that principle, a director, particularly a retired director, cannot be proceeded against for the company's tax arrears merely because of former association with the company.

Conclusion: The impugned notices attaching the petitioner's property were unsustainable and were set aside. Recovery was left open to be pursued against the assessee-companies in accordance with law.

Ratio Decidendi: Tax dues of a company cannot be recovered from a director's personal property unless the statute specifically fastens such liability; the company's separate legal personality must be respected.

---