TaxTMI 
TaxTMI 
2020 (11) TMI 241
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....resigned in less than a year i.e. on 08th July, 2015. 3. It has further been averred that petitioner had agreed to his appointment as a Director in good faith and that too at the behest of his cousin, Mr. Ram Mohan Gupta, who was the founder Director of the assessee-company. 4. It is also stated in the writ petition that even prior to petitioner's appointment as an Additional Director the assessee-company was under investigation by the anti-Evasion branch of Service Tax, Delhi-I, Commissionerate. Subsequent to petitioner's resignation as a Director, a show cause notice dated 24th April, 2017 was issued to the assessee-company and the same was decided vide Order dated 08th August, 2018 whereby the Commissioner, CGST, Delhi South Commissionerate, confirmed the demand and recovery of service tax along with interest and penalties against the assessee-company. 5. It is averred that the attested copy of the aforesaid order in original dated 08th August, 2018 was returned undelivered with the remark "refused" by the assessee-company and subsequently two demand notices dated 21st May, 2019 and 08th November, 2019 were issued to the assessee-company through the petitioner in his ca....
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..... ARGUMENTS ON BEHALF OF RESPONDENT 11. Mr. Harpreet Singh, learned senior standing counsel for the respondent stated that the petitioner was a Director in the assessee-company i.e. M/s Unickon Real Estate Pvt. Ltd. between 22nd August, 2014 and 08th July, 2015, during which period, service tax investigations were continuing (having begun on 27th February, 2014) and the statements were recorded. 12. He submitted that being a Director in a Company, a person is deemed to have knowledge of the affairs of the same and a bald assertion that he took up Directorship "in good faith and was not actively involved" cannot be accepted. 13. He stated that it is not a matter of dispute that there is evasion of Service Tax by the assessee-company as confirmed by the Order-in-Original dated 08th August, 2018. He pointed out that the adjudication proceedings were conducted and held against the assessee-company, which would essentially mean recovery of dues from not only the assessee-company but also from the then Directors and Additional Directors - who are deemed to have played an active role in such evasion of Service Tax. 14. Mr. Harpreet Singh submitted that a vicarious liability....
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....ho has resigned shall be liable, even after his resignation, for the offences committed by the company during his tenure. Thus, according to him, the penal / statutory liability is deemed to have been imposed by a statute upon the petitioner in this case under Section 87 of Finance Act in line with Section 9AA of Central Excise Act, 1944 and proviso to sub-section (2) of Section 168 of the Companies Act, 2013. COURT'S REASONING A COMPANY AND ITS DIRECTORS ARE SEPARATE AND DISTINCT JURISTIC ENTITIES AND THIS DISTINCTION CANNOT BE JETTISONED UNLESS THERE IS A SPECIFIC STATUTORY PROVISION TO THE CONTRARY OR TILL A CASE FOR LIFTING OF THE CORPORATE VEIL IS MADE OUT 18. Having perused the paper book and having heard learned counsel for the parties, this Court finds that after completion of investigation, a notice was issued to the assessee-company, a separate legal entity, on 24th April, 2017 i.e. subsequent to the petitioner's resignation as its Director on 08th July, 2015. 19. Further, the assessment proceedings culminated by way of the Order-in-Original (for short 'OIO') dated 08th August, 2018 against the assessee-company alone. 20. It is well-settled that a company i....
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....ith the submission of learned counsel for petitioner that the impugned attachment order is beyond the purview of Section 87(b)(i) of the Finance Act as the said provision provides for a garnishee order only - i.e. provides for attachment of funds of an assessee lying with third parties. Accordingly, Section 87(b)(i) of the Finance Act does not entitle the revenue to attach personal bank accounts of a director like the petitioner, for recovery of dues of the assessee company, on the assumption that money is due or may become due from the Petitioner to the assessee company. This perspective is wholly misconceived, contrary to the basic tenets of liability of the Company law, discussed in the preceding paras. 25. We have also contrasted the provisions of the Finance Act and the Central Excise Act, to the extent the same are applicable to Service Tax with Section 179 of the Income Tax Act, 1961 and Section 18 of the Central Sales Tax Act, 1956, which for quick reference are reproduced hereinbelow: A) Section 179 of the Income Tax Act, 1961: "179. Liability of directors of private company in liquidation. (1) Notwithstanding anything contained in the Compani....
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....ffairs of the company. However, there is no such provision viz-a-viz Service Tax and the absence thereof is determinative. Levy and collection of tax must be with the authority of law by virtue of Article 265 of the Constitution. Consequently, the impugned action against the petitioner is without jurisdiction. 26. In Sunil Parmeshwar Mittal vs. Deputy Commissioner (Recovery Cell), Central Excise, Mumbai & Ors., 2005 (4) Mah. LJ 837, the Bombay High Court has held as under:- "28. Thus, notices issued to the petitioners were not only in breach of principles of natural justice but the same were in violation of section 11-A of the Excise Act. At this juncture, it will not be out of place to mention that even under the provisions of the Companies Act the petitioners are not liable to discharge the liability of the company, if any, of which they were directors in the past. As soon as a company is incorporated, it constitutes an independent juristic person in the eyes of law as distinct from its members constituting it. Even private limited company consisting of only two members has, nonetheless, a separate legal entity. It is entirely different from its members. From the date....