TaxTMI 
TaxTMI 
2014 (5) TMI 534
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....ed Company, South of G.T. Road, Ghaziabad, engaged in manufacture of Iron & Steel. The unit suffered losses on which it was declared as 'sick industrial unit' by the Board of Industrial Finance and Reconstructing, under the Sick Industrial Undertakings (Special Provisions) Act, 1985. A revival scheme was prepared in which the industrial unit was proposed to be run on the fresh infusion of finances to be provided by the Industrial Finance Corporation of India (IFCI). 4. Shri I.S. Gambhir, the Director of the company and Shri A.S. Solanki, the Managing Director applied for registration under Section 8-A of U.P. Trade Tax Act, 1948 as well as Section 7 of the Central Sales Tax Act, 1956. In the statement given on oath by the representative of Shri I.S. Gambhir on 20.4.1991, it was stated that the company was under BIFR of which Shri I.S. Gambhir is the new promoter. It was stated in the statement recorded on Registration Form No. 14, that the entire machines are new. An application under Section 4-A was submitted by Shri A.S. Solanki (Managing Director) wherein it was represented/declared/certified that all the plants, machineries, equipments, apparatus and components have not been....
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....Trade Tax, Ghaziabad, Zone-B, Ghaziabad submitted a report to the Additional Commissioner Grade-I, Trade Tax, Ghaziabad that the unit was closed as sick industrial unit in 1986-87. It came into production by way of revival package sanctioned by BIFR. The unit obtained registration declaring the old machinery to be the new and had made a false representation for eligibility certificate claiming exemption of trade tax under Section 4-A on 7.3.1991. They continued to run the unit by making false declaration, whereas the company was not exempt for any amount of trade tax. 9. In the facts and circumstances of the case, notices were issued to all the directors/persons involved for defrauding the revenue and misusing the corporate personality, on 18.10.2004, to show cause as to why the directors may not be held personally liable for the dues after lifting the corporate veil of the company. 10. In pursuance to the notices issued by the Trade Tax Department Shri Jagbir Singh-the petitioner in Writ Tax No. 1464 of 2005 through his counsel Shri I.M. Puri, Shri G.L. Tandon and Shri R.C. Singh submitted their replies. All of them stated that Shri I.S. Gambhir is the person liable for all ....
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....f the dues could be made from him for the year 1991-92 and 1992-93. In respect of Shri I.S. Gambhir it was found that he was the Director of the company in 1991. He has resigned on 31.12.1995. He was thus liable for the business and the liability for the period from 4.2.1991 to 13.12.1995. He did not co-operate in the assessment and was found involved in the theft of electricity and evasion of excise duty and thus the entire dues upto 1995-96 could be recovered from him. 14. Shri L.K. Luthra he did not file any reply. He was in the list of Board of Directors dated 9.5.1991, and is shown as Managing Director in the annual report of 1992-93, and it was found that the amount for all the years can be recovered from him. 15. In respect of Shri Jagbir Singh, the Assessing Officer found that he was appointed as the Director in February, 1991 and resigned on 20.2.1992. There was no information of this resignation given to the Trade Tax Department. The Form 32 was produced showing that he resigned on 31.8.1992. The amount due for the year 1992-93, therefore, could be recovered from him. In respect of Shri S.P. Jain, the Assessing Officer observed that he has not filed any written expl....
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.... Directors in the annual report of the year 2003-04. The report does not mention that he was non-executive or temporary director. 18.The Assessing Officer found that Shri I.S. Gambhir, Shri L.K. Luthra and Shri Rajesh Luthra were responsible for defaults in respect of electricity dues and also to avoid the liability, they had changed their residence. 19. M/s Maharashtra Steels Limited filed an appeal No. 595 of 2005 (Misc.) against the order dated 30.3.2005 passed by the Assessing Officer, before the Joint Commissioner (Appeals)-IV, Commercial Tax, Ghaziabad. In this appeal filed by Shri I.M. Puri, the Appellate Authority accepted his statement that he was not the working director and was not looking after the day-to-day work. He was nominated by IFCI as a part time director. The appeal was allowed on 7.3.2008. 20. Similarly the appeal filed by Shri G.L. Tandon being Appeal No. 596/2005 was also allowed on the ground that he was a part time nominee director nominated by the IFCI. He was not responsible for day-to-day management of the company. The Appeal No. 601/2005 filed by Shri A.S. Solanki was, however, dismissed on 31.12.2007 on the ground that the appellant was the M....
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....re are no statutory provisions, where the circumstances exist the corporate veil can be lifted. Shri S.P. Kesarwani has relied upon Telco & ors vs. State of Bihar AIR 1965 SC 40 (paras 24 & 27); CIT vs. Shree Minakshi Mills Ltd Madurai AIR 1967 SC 819 (para 8); New Horizon Ltd & another vs. Union of India and others (1995) 1 SCC 478; Delhi Development Authority vs. Skipper Construction Co. P. Ltd (1996) 4 SCC 622 (paras 24 to 28); Calcutta Chromotype Ltd vs. Collector of Central Excise Kolkata AIR 1998 SC 1631 (para 12, 14); Shubhra Mukharjee & another v. Bharat Cooking Coal Ltd & another (2003) 3 SCC 312; Kapila Hingorani vs. State of Bihar JT 2003 (5) SC 1 (paras 25, 26, 27); Vodafone International Holding B.V. Vs. Union of India and others JT 2012 (1) SC 410 (para 167 & 168) to support the submissions, on the conditions and imperatives for lifting corporate veil. 24. Shri S.P. Kesarwani has also relied upon the judgments of this Court in Naresh Chandra Gupta vs. District Magistrate & ors 2003 NTN (22) 358 (paras 6 to 20); Shri Ram Gupta vs. Assistant Collector 2003 NTN 923) 995; Shri Ram Shyam Shukla and ors vs. Asstt. Collector, Collection, Trade Tax 2004 NTN (25) 768 (paras....
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....t up industries and businesses and it has played a historical role in helping industrialization. This principle was not made to help tax evaders. As held by the Supreme Court in Delhi Development Authority vs. Skipper Co. (P) Ltd AIR 1996 SC 2005 (vide para 28):- The concept of corporate entity was evolved to encourage and promote trade and commerce, but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the Court would ignore the corporate character and will look at the reality behind the corporate veil 5. The principle of lifting the veil of corporate personality has been upheld in Shubhra Mukharjee & another v. Bharat Cooking Coal Ltd & another (2003) 3 SCC 312; Calcutta Chromotype Ltd vs. Collector of Central Excise Kolkata AIR 1998 SC 1631; New Horizon Ltd & another vs. Union of India and others 1995 (1) SCC 478; C.I.T. vs. Meenakshi Mills Ltd Madurai AIR 1967 SC 819; Telco & ors vs. State of Bihar AIR 1965 SC 40; Juggilal Kamlapat vs. CIT, AIR 1969 SC 932. 6. In State of U.P. vs. Renusagar Power Co. 1988 (4) SCC 59 the Supreme Court observed: "It ....