Corporate veil can be lifted for tax evasion, with personal recovery sustained against controlling directors.

The corporate veil may be disregarded where a company is used as a device to evade statutory dues or defeat public revenue, and personal liability can then be fastened on those controlling the company. On the facts, the court found false declarations, non-participation in assessment, and a corporate structure used to shield evasion of trade tax and allied liabilities; the directors' pleas based on resignation, part-time status, and partial relief in appeal did not displace the recovery findings. The personal recovery certificates were therefore sustained and interference in writ jurisdiction was refused.

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Issues: (i) whether the corporate veil could be lifted to fasten personal liability on the directors for recovery of trade tax dues; (ii) whether the recoveries from the petitioners' personal assets could be sustained despite their pleas based on resignation, part-time directorship, and earlier appellate orders.

Issue (i): whether the corporate veil could be lifted to fasten personal liability on the directors for recovery of trade tax dues.

Analysis: The company was found to have obtained registrations and exemption-related benefits on false declarations, while large-scale tax, excise, and electricity dues were incurred and the assessment proceedings were not effectively participated in. The record showed that the corporate form was used as a device to evade statutory liabilities and to defeat public revenue. In such circumstances, the doctrine of separate corporate personality did not protect those who controlled and the company as an instrument of illegality and evasion.

Conclusion: The corporate veil was rightly lifted, and personal liability of the concerned directors was legally sustainable.

Issue (ii): whether the recoveries from the petitioners' personal assets could be sustained despite their pleas based on resignation, part-time directorship, and earlier appellate orders.

Analysis: The Court noted that the petitioners had not successfully displaced the findings recorded in the recovery order, and that only some directors had obtained relief in appeal. The material on record supported the conclusion that the petitioners were connected with the affairs of the company during the relevant period and that the recoveries were traceable to their roles in the corporate management. The circumstances did not justify interference in writ jurisdiction with the recovery certificates issued against them personally.

Conclusion: The recoveries from the petitioners' personal assets were upheld.

Final Conclusion: The writ petitions failed because the company had been used to evade statutory dues and the directors could be proceeded against personally for recovery of the outstanding liabilities.

Ratio Decidendi: Where the corporate personality is employed as a mask to evade statutory dues or to commit illegality, the Court may disregard the corporate veil and fasten liability on the persons ically responsible for the evasion.

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