Director liability for company VAT dues arises only on winding up and statutory conditions, not against a former director's bank accounts

Section 83(3) of the Punjab Value Added Tax Act, 2005 fastens joint and several liability on a director only when a private company is wound up and the tax, interest or penalty cannot be recovered from the company. On the stated facts, the company remained functional, its appeal was pending, and the petitioner was no longer a director, so recovery could not be pursued against the former director's personal bank accounts. The attachment was treated as an arbitrary exercise of power without statutory authority, and the saving bank accounts and notice dated 12.02.2021 were quashed, with penal costs indicated for wrongful attachment.

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Issues: Whether the bank accounts of a former director could be attached for recovery of the company's VAT dues before the company was wound up and in the absence of statutory authority.

Analysis: Section 83(3) of the Punjab Value Added Tax Act, 2005 fastens joint and several liability on a director only when a private company is wound up and the tax, interest, or penalty cannot be recovered from the company. The company in question remained functional, its appeal was pending, and the petitioner was no longer a director. In these circumstances, recovery could not be directed against the petitioner's personal bank accounts. The attachment was also found to be an arbitrary exercise of power and wholly without authority.

Conclusion: The attachment of the petitioner's saving bank accounts and the notice dated 12.02.2021 were illegal and were quashed. The petitioner was entitled to compensation by way of penal cost for wrongful attachment.

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