9911796707
TMI Blog1998 (11) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... levant aspects of the lengthy text of the application as is before this Tribunal. The application reveals that the applicant-company (hereinafter referred to as the company ) has its registered office in Calcutta wherefrom it sells a part of its products, viz., rice bran oil, sal seed oil and mohua oil which are manufactured at its factory at Balasore, Orissa. The business of the company is stated to have all along been in financial distress. For its business in Calcutta it was a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 (in short, the 1941 Act ) and was subject to assessment under the Act. By amendment of the 1941 Act turnover tax was introduced by a new section 6B effective from April 1, 1979. The company s gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand together with vernacular notices under section 7 of the Bengal Public Demand Recovery Act, 1913 (in short, the 1913 Act ). Thereafter, the Certificate Officer (in short, C.O. ) issued three notices, viz., No. 10392 dated January 14, 1997, No. 5307 dated September 10, 1997 and No. 19258 dated March 5, 1998. These notices are being challenged before this Tribunal by the company because they are addressed to the Directors, past and present. The company s contention is that it (the company) being a legal entity as well as certificate debtor in respect of the certificate cases can be proceeded against under the law and that its property may be attached and sold ; but the Directors, viz., applicant Nos. 1, 2 and 3, not being certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 dated January 14, 1997 and 19268 dated March 5, 1998) or even by designation (vide Notice No. 5307 dated September 10, 1997), conveying an administrative fiat for personal appearance of the directors or carrying threat of arrest or of intimidation of criminal proceeding. He further contends that the individual liability of the shareholders, including the directors vis-a-vis, the company is limited to the extent of unpaid amount of share value held by them and no further. He points out that in the case of the company all shares are fully paid up, leaving no room for calling upon the shareholders and for that matter, the directors, to shoulder any burden of the company. 3.. Mr. Mukhopadhyay, however, disputes the above contentions. He arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor. The impugned notice No. 5307 dated September 10, 1997 has been issued in the name of the company itself. Again, the impugned notice No. 19268 dated March 5, 1998 has been issued in the name of Mr. Bijoy Kumar Bhatter describing him as the Managing director. It may be seen that in terms of section 2(26) of the 1956 Act a Managing director is basically a director. It may be that Mr. Bijoy Kumar Bhatter at the time of service of this notice was not the Managing Director but one of the directors. But such technical mistake alone cannot vitiate the notice. After all, Mr. Bhatter is a director. However, in the notice dated January 14, 1997 Mr. Krishna Kumar Bhatter, Mr. Bijoy Kumar Bhatter, Mr. Sankar Kumar Bhatter and Mr. Ganeshlal Rathi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the director, manager and other officers, etc., such director, manager or other officers shall be deemed to be guilty and shall be liable to be proceeded against and punished accordingly. Section 22 of the Act declares certain acts of a dealer or person as offences punishable with simple imprisonment or with fine or with both. So, it is not correct to say that a director cannot be criminally prosecuted. The directors run the affairs of the company s business and hence non-payment of tax may be attributed to the neglect or connivance unless it is shown otherwise. So, if the applicants Nos. 1, 2 and 3 feel that they have no such liability in view of their role not being of the nature as stated in section 22A(2), they can canva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1984] 55 STC 209 it was held by the High Court of Kerala that a director of a company could not be personally proceeded against for arrears of sales tax due from the company. This decision was in the context of the Kerala General Sales Tax Act, 1963 which did not contain any provisions permitting any proceeding against a director in the abovementioned circumstances. We have already seen that section 22A(2) of the 1941 Act approves of such proceeding against a director in certain circumstances. This, however, does not mean that a director s own personal property is liable to be proceeded against, except to the extent of unpaid part of shares held by him. 7.. The last reported decision Rameswar Agarwalla v. State [1955] 6 STC 397 is no d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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