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Issues: Whether the personal property of a director or managing director of a private limited company can be attached for recovery of the company's sales tax dues under the Gujarat Sales Tax Act, 1969.
Analysis: The demand was raised against the company and not against the petitioner personally. The statutory provisions relied upon by the revenue dealt with offences by companies and recovery of dues as arrears of land revenue, but did not create a personal liability of directors for the company's tax dues or authorize attachment of their private property. In the absence of any order fastening liability on the petitioner individually and without any factual foundation to invoke lifting of the corporate veil, the company's liabilities could not be transferred to the petitioner's personal assets. The issue was covered by earlier decisions of the Court holding that directors' personal property cannot be proceeded against for company sales tax dues in such circumstances.
Conclusion: The attachment of the petitioner's personal property was illegal and unsustainable, and the challenge succeeded.
Ratio Decidendi: For recovery of sales tax dues of a company, a director's personal property cannot be attached unless the statute expressly creates personal liability or a proper factual basis exists to pierce the corporate veil.
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