Former directors not liable for company sales tax arrears absent statutory authority during the relevant liability period.

Former directors who had resigned before the relevant assessment years and before winding up could not be proceeded against for recovery of the company's sales tax arrears. The text explains that Section 19(b) of the Tamil Nadu General Sales Tax Act and Section 18 of the Central Sales Tax Act fasten liability on directors only within the statutory context of winding up and the relevant period of liability. As the petitioners had ceased to be directors before the arrears arose, and no provision authorised recovery for post-resignation liabilities, the recovery proceedings lacked legal foundation and were not maintainable.

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Issues: (i) Whether former directors, who had resigned before the relevant assessment years and before the company's winding up, could be proceeded against for recovery of the company's sales tax arrears.

Analysis: Section 19(b) of the Tamil Nadu General Sales Tax Act and Section 18 of the Central Sales Tax Act fasten liability on directors only in the context of the company's winding up and the relevant period of liability. The petitioners had ceased to be directors much before the tax arrears arose and also before the winding up of the company. In the absence of any enabling provision making them liable for arrears incurred after their resignation, the recovery proceedings had no legal foundation.

Conclusion: The proceedings against the petitioners for recovery of the company's sales tax arrears were not maintainable and were prohibited.

Final Conclusion: The writ petitions were allowed and the respondents were restrained from initiating recovery proceedings against the former directors for the company's sales tax dues.

Ratio Decidendi: Liability for a company's tax arrears cannot be fastened on persons who were not directors during the relevant assessment period or at the time of winding up, unless the governing statute expressly authorises such recovery.

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