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2019 (5) TMI 497 - HC - VAT / Sales TaxAttachment of property - Recovery of outstanding dues (tax liability) of the company from the Directors - HELD THAT - It is not in dispute that the property which is attached by the impugned notice is of the ownership of the petitioner No.1, who is the Director of the petitioner No.2 Company and therefore, as held by the Supreme Court in CHOKSI VERSUS STATE OF GUJARAT 2012 (3) TMI 392 - GUJARAT HIGH COURT , no attachment can be made - There is no provision in the Act fastening the liability of the Company to pay its sales tax dues to its Director and therefore, the impugned attachment notice dated 27.12.2017, is required to be quashed and set aside. Petition allowed - decided in favor of petitioner.
Issues:
Challenge to notice of attachment on residential property for alleged dues under Central Sales Tax Act, 1969. Analysis: 1. The petitioners challenged a notice of attachment dated 22.12.2017 on the residential property of the first petitioner for alleged dues under the Central Sales Tax Act, 1969 related to a business run by the second petitioner, a company named Asim Pharmachem Industries. The petitioners contended that recovery notices were issued without providing copies of assessment orders, and despite repeated requests, the authorities did not respond or provide the necessary documentation. 2. The petitioners argued that personal properties of the Director of a Private Limited Company cannot be attached for the company's dues under the Bombay Land Revenue Code. Citing legal precedents, they emphasized that the liability to pay sales tax dues of a company does not extend to its directors unless specifically provided by law. The petitioners highlighted that the attachment on the residential property was unjustified and sought relief from the court. 3. In response, the Assistant Government Pleader for the respondents defended the attachment, alleging that the petitioners engaged in fraudulent activities to evade tax dues. The respondents claimed that the petitioners were aware of the outstanding dues and deliberately avoided payment. They argued that the attachment on the property of the Director was valid to recover the dues owed by the company, emphasizing the need for compliance with tax obligations. 4. After considering the arguments presented by both parties and examining the legal principles, the court ruled in favor of the petitioners. The court emphasized that there was no provision in the Sales Tax Act holding the Director personally liable for the company's tax dues. Citing legal precedent, the court concluded that the attachment notice was invalid and ordered its quashing. The court highlighted that the law does not allow recovery of dues from the personal property of the Director in the absence of specific provisions to that effect. 5. Consequently, the court allowed the petition, quashed the impugned notice of attachment dated 22.12.2017, and set aside the charge on the residential property of the first petitioner. The court held that the attachment was not legally justified based on the established legal principles and precedents. The ruling was made absolute with no order as to costs, providing relief to the petitioners in the matter.
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