Directors' joint liability for unrecoverable company tax dues can extend to pre-amendment arrears under the statutory text.

Section 26C of the Kerala General Sales Tax Act fastens joint and several liability on directors for unrecoverable company tax dues, and the statutory wording links that liability to the outstanding dues rather than to the date of the provision's introduction. On that construction, the provision can apply to tax arrears that accrued before 1.4.1999 if they remained unpaid and unrecoverable when the section came into force. The contrary view, limiting the section only to dues arising after 1.4.1999, was rejected as inconsistent with the text. The State was therefore entitled to proceed against the concerned directors on that basis.

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Issues: Whether section 26C of the Kerala General Sales Tax Act, introduced with effect from 1.4.1999, could be invoked to recover tax arrears that had accrued before that date from directors of private companies, and whether the ancillary objections regarding revenue recovery procedure and the Companies Act affected the validity of the recovery proceedings.

Analysis: Section 26C fastens joint and several liability on every director who was in office during the period for which the tax or other amount became due, where the company's dues cannot be recovered. The language of the provision shows that the liability of the director is linked to the company's outstanding tax liability, not to the date on which the recovery provision was introduced. On that construction, the provision is capable of application to dues that had arisen before 1.4.1999, provided they remained unpaid and unrecoverable when section 26C came into force. The principle is consistent with the approach adopted in cases recognising that a provision creating liability for existing dues is not rendered retrospective merely because the antecedent tax period predates the amendment. The contrary view, which confined the section only to dues arising after 1.4.1999, was held not to reflect the statutory language.

Conclusion: Section 26C was held applicable to pre-1.4.1999 tax arrears still outstanding on that date, so the State could proceed against the concerned directors on that basis.

Final Conclusion: The challenge to the retrospective reach of section 26C failed, the State's appeal was allowed, and the connected relief to the extent inconsistent with that construction did not survive, while the separate appeal dismissed for want of entitlement to discretionary relief remained dismissed.

Ratio Decidendi: A statutory provision fastening directors' joint and several liability for unrecoverable company tax dues may be applied to liabilities that arose before its commencement if the text links liability to outstanding dues and not to the date of the amendment.

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