TaxTMI 
TaxTMI 
2012 (3) TMI 392
X X X X Extracts X X X X
X X X X Extracts X X X X
....llector, Revenue Recovery, Bombay, had initiated the proceedings for recovery of arrears of sales tax dues of M/s. Choksi Plastics Pvt. Ltd., from the present petitioners who are the directors of the said company. The said proceedings are challenged on the ground that the company and its directors being separate legal entities, the liability of the company to pay sales tax cannot be fastened on the directors personally or on the personal properties of the directors, in absence of any provision to that effect under the Gujarat Sales Tax Act, 1969. Consequential reliefs are also prayed for in the petition. Special Civil Application No. 3103 of 1991 also challenges the constitutional validity of the provisions of sub-section (4A) of section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ur per cent per annum on the amount of tax not so paid or on any less amount thereof remaining unpaid during such period: Provided that where a penalty is levied under sub-section (6) of section 45 in respect of the difference and the period referred to in that sub-section, no interest shall be payable under this sub-section on such difference for such period." However, by Amendment Act No. Guj. 20 of 2001, section 6, the rate of interest is reduced from 24 per cent to 18 per cent with effect from September 1, 2001. As regards challenge to the constitutional validity of sub-section (4A) of section 47 of the Act, our attention is invited to the decision of another Division Bench of this court in Ashapura Mineral Company v. State of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....paid tax within the prescribed time the liability to pay interest arises under the Act and it is not open to the sales tax authorities to waive it for any reason. Separate provision has been made by the Legislature for levy of penalty. The rate of interest under section 47(4A) is also not so high as to render it penal in nature. Considering the purpose for which the withheld amount can be utilised by the State Government, the prevailing rate of interest in the market, the rate of 24 per cent per annum cannot be regarded as too high to retain its compensatory character. Section 47(4A) is in reality and substance not a provision for imposition of levy of penalty and, therefore, it was not necessary for the Legislature to lay down guidelines a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....volved in Special Civil Application No. 243 of 1991 and also in Special Civil Application No. 7578 of 1991, Mr. Hasurkar and Mr Mankad, learned counsel for the petitioners, have submitted that since the company and its directors are separate legal entities, the liability of the company to pay sales tax on sale of goods effected by the company cannot be fastened on the directors personally or on the personal properties of the directors. Referring to the provisions of section 26, it is submitted that there are special provisions regarding liability to pay tax in certain cases like on the death of the dealer, partition of a Hindu undivided family, dissolution of a firm and transfer of business, termination of the guardianship or termination....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would like to point out that in neither of the two petitions, i.e., Special Civil Application No. 243 of 1991 and 7578 of 1991, the authorities have passed any specific order fastening the liability on the directors for payment of sales tax dues of the respective companies. For instance, in the letter dated August 31, 1989, the Assistant Sales Tax Commissioner (Appeals), Baroda, has informed the concerned Sales Tax Officer at Godhra that the appeal filed by Choksi Plastics Pvt. Ltd., was being dismissed on account of non-compliance with the order for deposit of the sales tax dues of the said company, but it appeared that the financial position of the directors of the said company was good and it was possible to recover the dues from the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 179 of the Income-tax Act, 1961, there is no provision in the Sales Tax Act fastening the liability of the company to pay its sales tax dues on its directors. Reliance placed by the learned AGP on the provisions of section 78 is misconceived. The section specifically deals with offences by companies and the criminal liability is fastened on the directors who were in-charge of and were responsible for the conduct of the business of the company, but does not at all provide for any personal liability of the directors to pay the sales tax dues of the company nor does it empower the authorities to proceed against the personal properties of the directors. The very fact that the same Legislature has in the same Act provided for criminal liabil....