1983 (4) TMI 247 - HC - VAT and Sales Tax

Summary

Issues involved:
The issue involves the legality of enforcing recovery of sales tax arrears against a Director of a private limited company personally.

Summary:
The petitioner, a Director of a private limited company, filed a writ petition seeking to prohibit the respondents from enforcing recovery of sales tax arrears against him personally. The sales tax amounting to Rs. 65,201.80 was due from the company for the year 1976-77. The petitioner contended that he is not the defaulter and cannot be proceeded against for the company's tax arrears. The court noted the absence of a counter-affidavit and accepted the petitioner's averments prima facie. The Government Pleader failed to provide any legal basis for proceeding against the petitioner personally for the company's tax liabilities. Consequently, the court held the recovery notice issued against the petitioner in his personal capacity as unauthorized and illegal, quashing the notice and restraining further recovery proceedings against him personally.

The judgment clarified that the ruling does not prevent the revenue from pursuing recovery against the company or the petitioner if it is proven that he possesses the company's assets. The revenue is also allowed to take recovery actions against the company and its assets in accordance with the law. The writ petition was allowed with no order as to costs.