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2020 (2) TMI 123 - HC - VAT and Sales TaxRecovery of the dues of the company from the Director - outstanding dues of Sales Tax - HELD THAT - Under Section 18 of the Central Sales Tax Act burden is placed upon a director to show that non-recovery cannot be attributed to him for his gross negligence, misfeasance or breach of duty. The notices state that the dues of the company have remained unpaid. The Petitioner is not in a position to controvert this assertion as according to the Petitioner, he was not aware of the position after he ceased to be the director. Therefore, we have to go by the case of the Respondents that the dues of the private limited company regarding sales tax have remained unpaid. Whether the non-recovery can be attributed to the Petitioner will be determined in the enquiry which the Respondents have stated will complete within three months. The Petitioner has invoked writ jurisdiction of this Court. There is no warrant to lift the embargo placed by the letter dated 15.11.2018 regarding non-issuance of No Objection Certificate - Petition disposed off.
Issues:
Challenge to notices issued by Commissioner of Sales Tax regarding outstanding dues, liability of director for unpaid dues of a private limited company, validity of notices under Bombay Sales Tax Act and Central Sales Tax Act, restriction on issuance of No Objection Certificate by Housing Society, burden of proof on director under Section 18 of Central Sales Tax Act, invocation of writ jurisdiction. Analysis: The Petitioner challenged the notices dated 10 October 2018 and 15 November 2018 issued by the Commissioner of Sales Tax, claiming to have ceased directorship of a sick private limited company in 2003 and being unaware of its affairs. The notices demanded payment of outstanding sales tax dues amounting to ?30,201,888 under the Bombay Sales Tax Act and Central Sales Tax Act. The Department directed the Housing Society not to issue a No Objection Certificate for transfer or sale of the Petitioner's property. The Petitioner argued that there is no provision for recovering company dues from a director under the Bombay Sales Tax Act and contended that representations were made regarding non-payment due to the company winding up. The Respondents clarified that the notice to the Housing Society was not an attachment notice but part of an enquiry to determine the Petitioner's liability after providing an opportunity. The Central Sales Tax Act places the burden on a director to prove non-recovery was not due to negligence, misfeasance, or breach of duty. The Court found no reason to lift the restriction on issuing No Objection Certificate and rejected the Petitioner's argument of no liability under the Bombay Sales Tax Act, stating that the enquiry would address this issue. The Court held that interference in the writ jurisdiction was unwarranted, disposing of the Writ Petition. The Petitioner was allowed to present all contentions in the ongoing enquiry, with the outcome subject to challenge if unfavorable.
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