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TMI Blog2015 (12) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery of arrears of sales tax from the directors of a private limited company in liquidation, the proceedings relating to recovery of arrears of tax from the petitioner being a director were not permissible in law. - Thus, the action of the respondents in compelling the petitioner to clear the dues of the company cannot be sustained. However, the respondents shall be at liberty to proceed against the company for clearance of its dues in accordance with law. - Petition disposed of. - CWP No. 9363 of 2015 - - - Dated:- 18-11-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr Jagmohan Bansal, Adv. and Mr Roopak Bansal, Adv For the Respondent : Mr Kamal Sehgal, Adv JUDGMENT Ajay Kumar Mittal, J. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the show cause notice. The adjudicating authority held that the company was liable to pay duty alongwith penalty and its directors were liable to pay penalty under Rule 26 of the Rules. Duty of ₹ 33.50 lacs was confirmed against the company apart from equal amount of penalty. Penalty of ₹ 3 lacs each on both the directors was also imposed. Thereafter, vide letter dated 11.11.2009, the petitioner informed the department that the business of the company stood closed and it had stocks and machineries to discharge the excise duty liability and that the amount may be recovered by attachment of properties. On the other hand, the petitioner filed his personal appeal before the Commissioner (Appeals). Vide order dated 22.6.2010, An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent No.2, it has been inter alia stated that during investigation, it was found that the unit was indulging in clandestine removal and undervaluation of goods manufactured by it. After investigation, demand of ₹ 33.50 lacs with equal amount of penalty was imposed on the company by the adjudicating authority. Since a huge amount of public money was to be recovered from the company, accordingly, notice was given to the company with a copy to its directors to deposit the amount. The petitioner being the director of the company had been asked to deposit the amount recoverable from the company. 5. We have heard learned counsel for the parties. 6. Admittedly, the company was found to be indulging in clandestine removal and underva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 343 held that in the absence of taking any specific recourse to proceedings under Section 18 of the Central Sales Tax Act, 1956 and any valid order for effecting recovery of arrears of sales tax from the directors of a private limited company in liquidation, the proceedings relating to recovery of arrears of tax from the petitioner being a director were not permissible in law. The relevant findings read thus:- 11. Taking up issue No. (ii), examining the argument of learned counsel for the respondents regarding Section 18 of the CST Act, it may be noticed that under Section 18 of the CST Act, when any private company is wound up and any tax assessed on the company under the said Act cannot be recovered, then every person, who was a dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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