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Issues: Whether recovery of sales tax arrears of a public limited company could be initiated against its erstwhile director under Section 19B of the Tamil Nadu General Sales Tax Act, 1959, and whether the assessment orders communicated to him personally could be enforced against him.
Analysis: The liability to recover tax arrears from a director depends on express statutory authority. A public limited company is a separate legal entity, and in the absence of a provision making an erstwhile director personally liable, recovery cannot be pursued against him for the company's dues. Section 19A, dealing with a partitioned Hindu family or dissolved firm, was inapplicable, and Section 19B, which concerns a private company on winding up, could not be invoked against a public limited company. Recovery of tax must also conform to Article 265 of the Constitution of India and can be pursued against the defaulting company in accordance with law.
Conclusion: Recovery proceedings against the erstwhile director under Section 19B were without jurisdiction and the recovery notice was quashed as against him. The assessment orders could not be enforced personally against him, though proceedings against the company were left open.
Final Conclusion: Personal recovery of the company's tax arrears from the erstwhile director was impermissible, while the department retained liberty to proceed against the defaulting company in the manner permitted by law.
Ratio Decidendi: An erstwhile director of a public limited company cannot be made personally liable for the company's tax arrears unless the statute expressly so provides; recovery must be pursued only against the company or otherwise strictly in accordance with law.
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