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of <h1>Former directors not liable for tax arrears if resigned pre-assessment years. Writ of Prohibition issued.</h1> <h3>Shyam Bhupatirai Ghia, Asit Chandmal, Vikram R. Chinai Versus The Deputy Commissioner (CT), Chennai, The Commercial Tax Officer, M/s. Mothercare India Ltd.,</h3> Shyam Bhupatirai Ghia, Asit Chandmal, Vikram R. Chinai Versus The Deputy Commissioner (CT), Chennai, The Commercial Tax Officer, M/s. Mothercare India ... Issues:Interpretation of liability of directors for tax arrears under Tamil Nadu General Sales Tax Act and Central Sales Tax Act.Analysis:The judgment by the High Court of Madras involved the interpretation of the liability of directors for tax arrears under the Tamil Nadu General Sales Tax Act and the Central Sales Tax Act. The petitioners, who were former directors of a Public Limited Company, resigned from their positions before the company was wound up. The court considered whether the actions of the tax authorities to recover tax arrears from the petitioners were justifiable.The court noted that Section 19(b) of the Tamil Nadu General Sales Tax Act and Section 18 of the Central Sales Tax Act make directors liable for tax imposed only if they were directors at the time of the company's winding up. In this case, the petitioners had resigned from their director positions before the assessment years when the tax arrears were due or the company was wound up. Therefore, the court found that the petitioners could not be held liable for the tax liability as they were not directors at the relevant point in time when the tax liability arose.The court referred to a previous judgment where it was held that directors who were in office only during the period for which the tax liability arose could be made liable. However, in the absence of any provision enabling the tax authorities to proceed against the petitioners and considering that the petitioners were not directors during the relevant assessment years or at the time of winding up, the court concluded that no proceedings could be initiated against the petitioners.As a result, the court issued a Writ of Prohibition, prohibiting the tax authorities from taking any proceedings against the petitioners for the recovery of sales tax arrears. The court allowed all the writ petitions, with no costs awarded, and closed the connected miscellaneous petitions.
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