Corporate limited liability: director not personally liable for company tax arrears; recovery must be from company assets.

A managing director of a limited liability company is not personally liable for taxes payable by the company unless statute expressly creates such liability or the director is liable for unpaid share money; statutory tax recovery and priority in winding up point to enforcement against company assets. Provisions permitting recovery from dealers or treating recoverable amounts as a fine do not, by themselves, convert company tax arrears into personal liabilities of a director. Consequently, a criminal court may not direct recovery of company tax arrears from a director as if they were a fine; recovery must proceed against the company and refunds issued where tax was collected personally.

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Issues: Whether a managing director of a limited liability company can be made personally liable for taxes due by the company and whether a Magistrate can direct recovery of company arrears of tax from the director as if they were a fine.

Analysis: The judgment analyses the distinction between the liability of members/directors of a limited liability company and partners of a firm, noting that members of a limited liability company are liable only to the extent provided by statute or unpaid share money. It examines provisions relied upon by the prosecution and finds they do not create personal liability of directors for taxes of the company. The statutory scheme treating taxes and revenues as payable from company assets and giving priority in winding up is treated as indicating recovery against the company rather than its members or directors. Provisions permitting recovery of amounts collected by dealers and directions enabling specification of tax recoverability as a fine are held not to authorize imposing personal liability on a director for taxes not personally payable by him.

Conclusion: The managing director cannot be made personally liable for arrears of tax due by the company, and the Magistrate's direction to recover the company's tax arrears from the director as if they were a fine is not permissible; recovery must be from the company's assets and refund ordered if tax was collected personally.

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