2024 (9) TMI 1317 - SCH - VAT / Sales Tax

Challenge to recovery notice - recovery of the dues of a Company from its Directors - alternative remedy under Section 287-A of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 - HELD THAT - On a plain reading of sub-Section (1) of Section 12 of the Act, the liability of the Directors of a private company will arise when a private company is wound up after the commencement of the Act. Therefore, Section 12 (1) will have no application as an order of winding up has not been produced. Therefore, when there was no provision under the Act under which dues of a limited company could have been recovered from its Directors, the third respondent was not justified in issuing the recovery certificate and demand notice against the appellant. These crucial factors have been ignored by the High Court. It ought to have been noted by the High Court that an attempt to recover tax payable by the Company from the appellant from its inception was illegal and, therefore, the appellant ought not to have been driven to the remedy of preferring an appeal. The impugned judgments and orders of the learned Single Judge and the Division Bench are set aside. The notice of recovery dated 6th June, 2019 issued by the third respondent is hereby quash and set aside - Appeal allowed.

Summary

The Supreme Court allowed the appeal filed by M/s. SLR Impex Private Limited against a recovery notice issued by the State Government of Uttarakhand under the Uttarakhand Value Added Tax Act, 2005. The Court held that the recovery proceedings against the company's director were unjustified as there was no provision for recovering dues from directors under the Act. The recovery notice dated 6th June, 2019 was quashed and set aside.