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of <h1>Court sets aside notice of Attachment, ruling in favor of former director against recovery actions</h1> <h3>VALLURIPALLI NAGARJUN, HYD Versus DEPUTY COMMERCIAL TAX OFFICER, HYD 3 OTHERS</h3> VALLURIPALLI NAGARJUN, HYD Versus DEPUTY COMMERCIAL TAX OFFICER, HYD 3 OTHERS - TMI Issues involved:Challenge to the impugned notice of Attachment in Form 5 under Section 27 of the Andhra Pradesh Revenue Recovery Act, 1864 for recovery of tax arrears from a company's director post his resignation.Analysis:1. The petitioner filed a Writ Petition seeking a Writ of Certiorari to quash the notice of Attachment in Form 5 issued by the 1st respondent under the Andhra Pradesh Revenue Recovery Act, 1864, for recovering tax arrears from the 3rd respondent company for the year 2002-03 under the Central Sales Tax Act, 1957. The petitioner argued that he ceased to be the Director of the company before the tax arrears arose, and recovery from directors is only permissible in specific circumstances, such as during winding up proceedings.2. The petitioner contended that the company's tax arrears were being sought to be recovered from him, even though the company had amalgamated with another company. The respondent argued that the amalgamation of the company would deem it to be wound up, allowing for recovery from directors. However, the Court noted that amalgamation does not equate to winding up as per the Companies Act, 1956, and recovery from directors is limited to specific scenarios.3. Citing previous judgments, the Court emphasized that recovery from directors is permissible only when a company is in liquidation. The Court differentiated between winding up and amalgamation, stating that the latter does not automatically trigger recovery from directors. Relying on established legal principles, the Court held that the action of the 1st respondent in issuing the notice of attachment for recovery of tax arrears from the petitioner, as a former director, was not legally sustainable.4. Consequently, the Court set aside the impugned notice of Attachment in Form 5 and granted relief to the petitioner. The Writ Petition was allowed, and any pending petitions were closed in light of the final order, with no costs imposed. The judgment clarified the legal position regarding recovery of tax arrears from directors of companies, emphasizing the necessity of specific circumstances, such as liquidation, for such recovery actions to be valid.
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