1998 (6) TMI 551 - HC - VAT and Sales Tax

Summary

Issues involved: Directors' liability for sales tax arrears of a company under the Kerala General Sales Tax Act, 1963.

Summary:
The petitioners, directors of a company, sought relief against coercive action by respondents 3 to 5 for recovery of sales tax arrears due from the company. The petitioners argued that as directors, they cannot be personally liable for the company's debts u/s the Kerala General Sales Tax Act. The court held that a company is a separate legal entity from its directors, and proceedings cannot be taken against directors for company debts. The respondents' actions were deemed without jurisdiction and violative of natural justice and fundamental rights. The petitioners had no personal liability for the company's dues, and the recovery proceedings were found to be unsustainable. Additionally, the court noted that no assessment orders were served on the company or the petitioners, rendering the proceedings initiated by the respondents as without jurisdiction. Citing relevant case law, the court ruled in favor of the petitioners, declaring that they have no personal liability for the company's sales tax arrears. Consequently, all proceedings against the petitioners were deemed ineffective, and the pre-assessment notices were quashed.

Separate Judgment:
No separate judgment was delivered by the judges in this case.