2017 (8) TMI 626

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....dvocate practicing at the Bombay High Court, is aggrieved by a demand notice issued for recovery of Sales Tax under the provisions of TNGST from a Company, namely, M/s.Entel Limited, which has its registered office at Bangalore, in which, he was a Director for a brief period. On 08.12.1998, the petitioner has resigned from his Directorship, which came to be accepted by the Board of Directors on 22.12.1998. It appears that M/s.Entel Limited were defaulters in payment of sales tax and the authority under the TNGST has directed the revenue recovery authorities to initiate proceedings for recovery of the arrears, which ultimately lead the petitioner to challenge the revenue recovery proceedings before the Bombay High Court, which was permitted ....

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....the said provision will apply only if a company had been wound up and to the directors who hold the said status at the time of winding up of the company. That is not the case here. So section 19-B does not empower the authorities to take recovery proceedings against the petitioner. 6. Section 19-A of the Act will apply regarding the liability of the partitioned Hindu family, dissolved firm, etc. The said provision also cannot be made applicable to the petitioner's case. 7. The other provision to be considered is, section 18 of the Central Sales Tax Act. It deals with the liability of directors of private company in liquidation which reads as follows : "Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), w....

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....When any private company is wound up and any tax assessed on the company 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 the tax is due, shall be jointly and severally 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'. It is apparently clear from the provisions of section 16-B that, that section has no application at all unless the company is wound up. According to the provisions of section 16-B, the directors of a privat....