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TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 489
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....U.P. Trade Tax Act as well as under the Central Sales Tax Act. When the petitioner came to know about the ex parte orders, an application under Section 30 was filed for the recall of the ex parte assessment order and, at the same time, also preferred an appeal along with a stay application before the Joint Commissioner (Appeals), Trade Tax, Kanpur, which is alleged to be pending till date. It has also been stated that the application under Section 30 of the Act was rejected by an order dated 23rd November, 2007. Subsequently, a recovery notice dated 29th December, 2007 has been issued by the Assistant Collector (Collection), Trade Tax, Kanpur Nagar against the petitioners for recovery of the amount pursuant to the ex parte assessment order. The petitioners, being aggrieved by the said recovery notice, have filed the present writ petition. We have heard Sri Subham Agarwal, the lerned counsel for the petitioner and Sri C.B. Tripathi, the learned Special Counsel for the State-respondents. The moot question which arises for consideration is whether the liability due against the Company can be fastened and recovered against the Directors of the Company. This question is no longer res ....
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....Dr. Pawan Jain Vs. Commissioner, Trade Tax, U.P., Lucknow and another, VSTI 2007 AHC 152. In Smt. Uma Singhania, Kanpur and another Vs. Assistant Collector (Collection), Trade Tax, Kanpur and another, 2007 UPTC 654 the Court held that in the absence of fraud being alleged to the effect that the Directors had siphoned off the funds of the Company, no recovery of the trade tax dues of the Company could be made from the personal assets of the Directors. The Court held that the liability of the shareholders as well as of the Directors was limited by shares and that if there were dues of the Trade Tax department against the Company, the department comes into the position of a secured creditor and can lodge a claim as a secured creditor in the liquidation proceedings. In M/s Meekin Transmission Ltd., Kanpur Nagar and another Vs. State of U.P. and others, 2008 UPTC 600, a Division Bench of this Court held that the mere fact that the Company had failed to pay the government dues or public revenue by itself would not invite the doctrine of lifting the corporate veil and was not sufficient to ignore the statutory corporate body conferred upon a Company and make it directors or shareholders....
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....d others, 2012 (50) NTN 236 in which it was held that by lifting the corporate veil it can be found that the corporate personality was used as a mask for evasion of tax and that the corporate personality was sued to recover sham and collusive transactions and that when such tactics are used to circumvent the statutory liability, the taxes could be covered from the Directors by lifting the corporate veil inspite of absence of statutory provisions. Having heard the learned counsel for the parties, the Court finds that the submission of the learned counsel for the State appears to be attractive in the first flush but, on a closer scrutiny, the Court finds that the doctrine of lifting the corporate veil is not applicable in the present facts and circumstances of the case. The Company, in law has a separate legal entity of its own. Once incorporated, the entity of the Company is entirely separate from that of its shareholders. The Company has its own name, has its own seal, has its own assets and it can be sued or can sue for its own purposes. On the other hand, the liability of the shareholders is limited to the extent of its own shares, namely, to the extent of the capital invested ....
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....tate 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). ` In Shri Ram Shyam Shukla and others Vs. Asstt. Collector, Collection, Trade Tax, 2004 NTN (25) 768 this Court held that where circumstances so warranted, persons responsible for illegal acts and who were found to evade tax, the corporate veil could be lifted to recover the dues from the persons responsible for such illegal acts. The Court held:- "4. We do not agree. The legal principle that a company is a distinct legal entity separate from its directors and shareholders (vide Soloman Vs. Soloman & Co. Ltd., 1897 A.C. 22 H.L.) was evolved to encourage business and industry since many businessmen feared to start a new business or venture because if the said business/ venture failed (due to competition, recession, etc.) even their personal assets could be attached and sold for the recovery in respect of the dues against the company. Hence his principle was created so as to encourage businessmen to take risks and set up industries and businesses and it has played a historical role in helping industrialization. This principle was ....
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....n concerned or the Director was personally responsible for playing a fraud upon the Company for his personal gains. It must be specifically pleaded that the corporate personality has been obtained as a pretext to cover up a transaction or intention of those persons, who was committing fraud or misrepresentation and, therefore, the legal personality of the corporate body should be ignored and the corporate veil should be lifted to find out the culprit and fix responsibility. In the instant case, the only plea raised in the counter affidavit is, that petitioner no.1, being a Director, was responsible to run the affairs of the Company and was liable to satisfy the outstanding dues. Further, petitioner no.1 had not disclosed that any assets of the Company was still existing from which the outstanding dues could be realized and, therefore, the petitioner no.1 was liable to pay the outstanding dues. No plea of fraud has been alleged nor there is any plea that petitioner no.1 was deliberately diverting the funds of the Company for his personal gains. There is also no plea against petitioner no.2, who was only the authorized representative of the Company looking after trade tax matters be....