Director liability for sales tax arrears depends on statutory preconditions; recovery failed where resignation preceded winding up.

Director liability for company sales tax arrears arises only where the statute's express preconditions are met, including winding up or liquidation and the person being a director at the relevant time. Under the Tamil Nadu General Sales Tax Act, Section 19-B applies only in a winding-up context, and the corresponding principle under the Central Sales Tax Act links personal liability to unrecovered tax in liquidation of a private company. Where the individual had resigned as director years before recovery action and the company was neither wound up nor liquidated, the statutory basis for fastening personal liability was absent, and the recovery proceedings and demand notice were unsustainable.

---

---

Issues: Whether arrears of sales tax could be recovered from a person who had resigned as director long before the recovery proceedings were initiated, when the company had not been wound up or liquidated.

Analysis: Liability of directors for company tax arrears under the Tamil Nadu General Sales Tax Act arises only within the conditions expressly contemplated by the statute. Section 19-B applies where the company is wound up and the person sought to be made liable was a director at the time of winding up. The analogous principle under Section 18 of the Central Sales Tax Act is that director liability for unrecovered tax arises in the context of liquidation of a private company. As the petitioner had resigned from directorship years before the recovery action, and the company was not shown to have been wound up or liquidated, the statutory preconditions for fastening personal liability were absent.

Conclusion: The recovery proceedings against the petitioner were without jurisdiction and unsustainable, and the impugned demand notice was set aside in favour of the petitioner.

---