2007 (12) TMI 417

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....UMAR JAIN J.-The point for consideration in this petition is as to whether a director of a company can be made personally liable for the amount due from the company for the arrears of State and Central sales tax? The petitioner is the director of M/s. Agni Wire Industries Pvt. Ltd. Respondent No. 2 served a show-cause notice dated December 22, 2005 (annexure P-1) to the petitioner to recover....

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....e, the action much less the impugned notices, annexures P-1 and P-3, are illegal, arbitrary, whimsical and against the well-settled law. In the written statement filed by respondent No. 3 on behalf of respondent No. 1 as well, it was pleaded that the recovery certificate has been issued to the petitioner for the arrears of sales tax under the Central Sales Tax Act, 1956 and the recovery of the ....

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....y be liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company." The petitioner filed replication to the written statement. It is categorically mentioned that the company is still not wound up or formally liquidated. The respondents however, did not cont....

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....aced reliance upon section 18 of the Act in order to canvass that when any private company is wound up after the commencement of this Act and any tax assessed under this Act for any period, whether before or in the course of or after its liquidation, cannot be recovered, then every person who was a director of the private company at any time during the period for which tax is due shall be jointly ....