Corporate veil limits tax recovery from personal assets where no statutory basis exists for director liability.

A company's sales tax dues could not be recovered by attaching a director's or lessor's personal property because the company and its directors were separate legal entities and the sales tax law contained no provision fastening the company's tax liability on them personally. Section 78 addressed criminal liability for company offences, but did not create civil liability for tax recovery. The court also held that lifting the corporate veil was unavailable on the facts, as there was no specific order or factual basis to proceed against the petitioners individually. The revenue authorities were bound to implement the appellate order setting aside the attachment and delete the entry from the revenue records.

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Issues: Whether the personal property of a director or lessor could be attached and recovered against for the sales tax dues of the company, and whether the revenue authorities were bound to delete the attachment entry in the revenue records after the appellate order had quashed the attachment.

Analysis: The attachment was found to be unsustainable because the company and its directors were separate legal entities and there was no statutory provision under the sales tax law fastening the company's tax liability on the directors or authorising recovery from their personal properties. Section 78 dealing with offences by companies created criminal liability in appropriate cases but did not create personal civil liability for tax dues. The doctrine of lifting the corporate veil was held inapplicable on the facts, as no specific order or factual foundation existed to proceed against the petitioners personally. Since the first appellate authority had already set aside the attachment, the authorities were bound to give effect to that order by deleting the revenue entry.

Conclusion: The attachment of the petitioner's property for the company's sales tax dues was impermissible, and the authorities were directed to comply with the appellate order and delete the attachment entry.

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