TaxTMI 
TaxTMI 
2026 (6) TMI 701
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....O: As the three Writ Petitions arise out of the same issue and relate to the same company in liquidation, they are being disposed of, by way of this Common Order. 2. Heard Sri Karan Talwar, learned counsel for the petitioners and the Learned Government Pleader for Commercial Tax, appearing for the respondents. 3. The petitioners, in these Writ Petitions, are directors of a private limited company called M/s. Kusalava Batteries Private Limited. This company has been liquidated under the provisions of the Insolvency & Bankruptcy Code, 2016, by virtue of the Orders of the National Company Law Tribunal, Amaravati Bench, in C.P(IB) No.546/9/HDB/2018. During the course of liquidation, the commercial tax authorities had approached the Liq....
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....ly if the authorities could not recover the tax and a notice under Section 24(5) of the AP VAT Act, without exhausting all the avenues of recovery, was not permissible. Apart from this, the petitioners also contended that the directors of a private limited company cannot be required to make good the tax dues of the company unless the requirements of Section 24(5) of the AP VAT Act, namely inability to collect on account of gross negligence, misfeasance or breach of duty, are made out. No further action appears to have been taken by the authorities, after these objections were filed, till 18.09.2025. The 1st respondent, on 18.09.2025, attached the back accounts of the petitioners, by issuing a notice under Section 29 of the AP VAT Act, to th....
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....any. He further submits that the language of the provision itself makes that clear. 8. Section 24 of the AP VAT Act reads as follows:- Section-24. Liability of partnership firms: (1) Where any firm is liable to pay any tax or other amount under the Act, the firm and each of the partners of the firm shall be jointly and severally liable for such payment. (2 )Where any business carried on by a firm or a Hindu Undivided Family or an Association has been discontinued or dissolved, the authority prescribed shall make an assessment on the taxable turnover and determine the tax payable as if no such discontinuance or dissolution had taken place and all the provisions of the Act including provisions relating to levy of....
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....ovision, for the purposes, of this Writ Petition, is Section 24(5) of the AP VAT Act. Under this provision, unpaid taxes and other amounts, due under the AP VAT Act or the Central Sales Tax Act, 1956, can be recovered from any director of a private limited company, which goes into liquidation and has not paid its tax dues. However, this right to recover is subject to two conditions. Firstly, the authorities must be in a position where they cannot recover any tax dues from the company. Secondly, the nonpayment of tax by the company should be on account of gross negligence, misfeasance, or breach of duty on the part of the directors, in question, in relation to the affairs of the company under liquidation. 10. The first condition, is that ....
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....monstrating that there was no such gross negligence, misfeasance, or breach of duty on the part of the directors, would fall upon the directors of such a private limited company in liquidation. 12. We are fortified in this view by the Judgment of the High Court of Gujarat at Ahmedabad, in R/Special Civil Application Nos.5354 & 5355 of 2018, dated 27.08.2018. The view of the High Court of Gujarat at Ahmedabad, can be extracted from the following:- "7. At the outset, we may notice that section 179 of the Act would enable the Revenue to recover the unpaid tax dues of a private company from its director, unless he proves that the non-recovery cannot be attributed to any gross negligent, misfeasance or breach of duty on his part in r....