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Issues: Whether recovery proceedings, including the recovery certificate and attachment, could be sustained against the property of a deceased former director for recovery of tax dues of the company under the Gujarat Value Added Tax Act, 2003 and the Central Sales Tax Act, 1956.
Analysis: The liability under Section 53(3) of the Gujarat Value Added Tax Act, 2003 and Section 18 of the Central Sales Tax Act, 1956 arises only in the context of a private company being wound up and only after the director is given an opportunity to show that the non-recovery is not attributable to his gross neglect, misfeasance or breach of duty. The record showed that the director had resigned and had died before the recovery proceedings were initiated. In such circumstances, the authorities proceeded against a dead person and without the foundational requirement for fastening liability on the director personally. The provisions do not permit recovery of the company's dues from the personal property of the director in the absence of the statutory preconditions.
Conclusion: The impugned recovery proceedings and attachment were unsustainable and were quashed, in favour of the assessee.
Ratio Decidendi: Statutory liability of a company's director for tax dues can be fastened only where the company is in liquidation and the director is shown to be responsible, after due opportunity, for the non-recovery through gross neglect, misfeasance or breach of duty; absent those conditions, recovery from the director's personal property is impermissible.
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