Court quashes order attaching properties for VAT dues, directors not personally liable.

The court quashed the order attaching immovable properties of petitioners for VAT dues of a company amounting to Rs. 2.17 crores, citing ongoing assessments and possible errors in demands raised prematurely. It refrained from commenting on input tax credit issues but questioned the legality of attaching personal properties of directors for company dues. Relying on statutory provisions and previous decisions, the court held that tax authorities lacked power to hold directors personally liable for company tax dues. Consequently, the court set aside the order, allowing the petition and concluding the case.

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Issues:
1. Validity of order attaching immovable properties for VAT dues of a company.
2. Claim of input tax credit by the company.
3. Legality of attaching personal properties of directors for company's dues.

Issue 1:
The judgment concerns the quashing of an order attaching immovable properties of petitioners for VAT dues of a company. The Assistant Commissioner attached properties due to possible tax, interest, and penalty dues of Rs. 2.17 crores by the company. The petitioners argued that assessments were ongoing, and errors were made in raising demands before finalizing assessments. They contended that the company did not claim undue input tax credit and errors could be rectified. The counsel also argued against attaching personal properties for company dues, citing a previous court decision.

Issue 2:
The petitioners claimed that the company had not claimed any input tax credit wrongly and that errors in purchases could be rectified. The Assistant Commissioner raised demands without finalizing assessments, prompting objections from the petitioners. The Assistant Government Pleader defended the order based on discrepancies in purchases made by the petitioners. The court refrained from commenting on the input tax credit controversy while questioning the attachment of directors' personal properties.

Issue 3:
The court analyzed the legality of attaching personal properties of directors for company dues. Referring to a previous Division Bench decision, the court noted that statutory provisions did not empower tax authorities to hold directors personally liable for company tax dues. The judgment highlighted that the Sales-tax Act did not fasten liability on directors for company dues. The court also discussed the provisions of the VAT Act related to provisional attachment of property belonging to the dealer, emphasizing that the dealer would be the company and not the directors. Ultimately, the court set aside the impugned order, allowing the petition and disposing of the case.

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