TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Individual cannot be held liable for tax dues of company under liquidation</h1> <h3>Mr. Pranay Dhabhai Versus State Of U.P. And 2 Others</h3> Mr. Pranay Dhabhai Versus State Of U.P. And 2 Others - TMI Issues Involved:1. Recovery of tax dues from the personal assets of the petitioner.2. Vicarious liability of the petitioner for the tax dues of the Company-under-Liquidation.3. Application of the doctrine of lifting the corporate veil.Summary:1. Recovery of tax dues from the personal assets of the petitioner:The petitioner filed a writ petition to resist the recovery of tax dues of M/S Global Brands Enterprise Solutions Private Limited (Company-under-Liquidation) from his personal assets. The Delhi High Court had appointed the Official Liquidator as the Provisional Liquidator on 09.09.2013, and the Provisional Liquidator took over the assets in October 2013. Subsequent ex-parte assessment orders were passed for A.Ys. 2010-11, 2011-12, 2012-13, creating a total demand of Rs. 12,43,94,434/-. The assessing authority issued recovery citations against the petitioner, alleging he was the director at the relevant time.2. Vicarious liability of the petitioner for the tax dues of the Company-under-Liquidation:The petitioner contended that he never incurred any vicarious liability to discharge the tax dues of the Company-under-Liquidation. The petitioner argued that neither the U.P. VAT Act, 2008 nor the Central Sales Tax Act, 1956 imposed such liability on him. The petitioner maintained that he had conducted himself lawfully concerning the affairs of the Company-under-Liquidation.3. Application of the doctrine of lifting the corporate veil:The court noted that the revenue authorities did not present any special facts in the Counter Affidavit to infer that they had lifted the corporate veil and found the petitioner as the real person benefiting from the business transactions of the Company-under-Liquidation. The court referenced previous judgments, including M/S Meekin Transmission Ltd. and others Vs. State of Uttar Pradesh and others (2013) 58 VST 2001 (All) and A.S. Solanki Vs. State of U.P. and others [Neutral Citation-2023:AHC:130306-DB], which clarified that the doctrine of piercing the corporate veil should not be applied routinely but only in cases of fraud or improper conduct.The court emphasized that the burden of proof lies on the authorities to justify invoking the doctrine of lifting the veil. In the absence of such justification, the petitioner cannot be held personally liable for the dues of the Company-under-Liquidation.Conclusion:The writ petition was allowed, and the revenue authorities were directed to restrain from recovering the disputed tax dues from the personal assets of the petitioner. However, they were permitted to proceed against the assets of the Company-under-Liquidation. No order as to costs was made.
TaxTMI 
TaxTMI 
