Separate legal personality limits personal tax recovery against directors unless statute expressly imposes liability.

A limited liability company remains a separate legal entity, so its directors or shareholders are not personally liable for company tax arrears unless a statute expressly creates that liability. The Companies Act framework referred to recovery of revenues, taxes, cesses and rates from the company's assets in winding up, not from directors personally. Sales tax recovery provisions applied only to a person who was statutorily liable to pay tax or who had wrongfully collected it, and the criminal recovery mechanism for tax as a fine could not be extended to a tax not personally payable by the managing director. Personal recovery against the managing director was therefore unsustainable.

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Issues: Whether the managing director of a limited liability company can be made personally liable for arrears of sales tax due from the company and have such arrears recovered from him as if they were a fine.

Analysis: A company incorporated with limited liability is a separate legal entity, and the liability of its members is confined to the extent permitted by the governing statute. In the absence of a statutory provision creating personal liability, directors or shareholders cannot be proceeded against personally for the company's debts or taxes. The relevant provisions of the Companies Act indicated that revenues, taxes, cesses and rates were recoverable from the company's assets in winding up, not from directors personally. The sales tax provisions relied upon only authorised recovery against the person who was himself statutorily liable to pay or who had wrongfully collected tax, and the provision relating to criminal recovery of tax as a fine could not extend to a tax that was not personally payable by the director.

Conclusion: The direction fastening personal liability on the managing director for the company's tax arrears was not sustainable; recovery could be made only against the assets of the company.

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