Court rules director's personal property can't be attached for company's tax dues

The High Court ruled in favor of the petitioner, stating that the order attaching his property for VAT dues recovery was not legally sustainable. The court emphasized the separation of legal entities between a company and its directors, highlighting that personal property of a director cannot be attached for the company's tax dues. The court allowed the petition, quashing the order and setting aside the attachment of the petitioner's property.

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Issues:
1. Attachment of property for VAT dues recovery
2. Liability of director for company's tax dues

Issue 1: Attachment of property for VAT dues recovery
The petitioner, a nominal director of a company, challenged an order attaching his property for VAT dues recovery. The petitioner argued that he was not involved in the company's affairs and had resigned as a director in 2011. The High Court noted that under the VAT Act, personal property of a director cannot be attached. The court highlighted that the petitioner's resignation was reflected in form no.32, indicating he was no longer a director. The court also referred to a previous judgment emphasizing that a company and its directors are separate legal entities, and the liability of the company cannot be imposed on the directors personally. The court concluded that the order attaching the petitioner's property was unjust and lacked legal authority, quashing it.

Issue 2: Liability of director for company's tax dues
The Assistant Government Pleader argued that the petitioner was actively associated with the company as a director and had signed documents related to bank transactions, making him liable for the tax dues. However, the court held that the petitioner's association with the company did not automatically make him personally liable for the company's tax dues. The court cited previous judgments emphasizing the separation of legal entities between a company and its directors. The court highlighted that there was no provision in the VAT Act empowering authorities to fix liability on a director personally for the company's tax dues. The court allowed the petition, quashing the order attaching the petitioner's property and emphasizing that the petitioner's personal property could not have been attached based on the impugned order.

In conclusion, the High Court ruled in favor of the petitioner, stating that the order attaching his property for VAT dues recovery was not legally sustainable. The court emphasized the separation of legal entities between a company and its directors, highlighting that personal property of a director cannot be attached for the company's tax dues. The court allowed the petition, quashing the order and setting aside the attachment of the petitioner's property.

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