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TMI Blog2018 (1) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on record a copy of assessment order for the year 2007-08 under Section 25(7) of the Vat Act as well as Section 9(2) of Central Sales Tax Act. 4. Respondent no.2, on 12.12.2011, issued a recovery certificate to the District Magistrate/Collector of District U.S. Nagar for recovering the tax dues and penalty imposed upon the company for the assessment year 2007- 08. 5. The case of the petitioners, in a nutshell, is that the directors of the company are not liable and the amount can be recovered only from the assets of the company. Their further contention is that they have tendered their resignations. 6. Learned counsel for the State submits that the petitioners are liable under Section 12 of Uttarakhand VAT Act, 2005. He has supported the assessment orders issued vide Annexure No.3 (colly.). 7. I have heard and gone through the impugned order carefully. 8. Section 2(11)(e) of the Uttarakhand VAT Act, 2005 (hereinafter referred to as the Act) reads as under: - "(e) an individual, a firm or a company or other body corporate, club, Hindu Undivided Family or any other system of joint family, association of persons, trust, and co-operative society or any other society, whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner (Assessment) Sales Tax Kanpur and Ors. 1987 U.P.T.C. 473; Chhedi Lal Gupta v. Additional Commissioner of Trade Tax, Varanasi and Ors. 2002 (20) NTN 20, G.C. Mehrotra, Allahabad (Supra); Sudershan Kumar Gulati, Kanpur and Ors. v. Deputy Collector (Collection, Sales Tax, Kanpur and Ors. 1994 U.P.T.C. 717; Purshottam Das Beriwal, Kanpur v. Deputy Collector (Collections), Sales Tax, Kanpur 1989 U.P.T.C. 456; Yogendra Kumar Tyagi and Ors. v. Collector, Muzaffarnagar and Ors. Writ Petition No. 8260 of 1996, decided on 20.03.1996; Surendra Kumar v. Collector, Muzaffarnagar Writ Petition No. 35755 of 1993, decided on 16.12.1993; Jugal Kishore Paliwal v. Collector, Muzaffarnagar, Writ Petition No. Nil of 1994, decided on 10.05.1994; Bhiku Ram Jain v. State of U.P. 2001 U.P.T.C. 364; Shri Mahendra Kumar Jaipuria v. Commissioner of Trade Tax U.P. Lucknow and Anr. VSTI 2007 All. H.C. 150; Ram Nath Gupta v. State of U.P. and Ors. 1999 U.P.T.C. 1289; Dr. Pawan Jain v. Commissioner, Trade Tax, U.P., Lucknow and Anr. VSTI 2007 All. H.C. 152; Devendra Prakash Goel and Anr. v. Commissioner of Trade Tax, U.P., Lucknow and Anr. VSTI All.H.C. 153 and Smt. Uma Singhania and Anr. v. Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Director for taking advantage of his expertise in his field of vocation or profession, and for achieving goals for which the company is incorporated. Such Director is paid remuneration, if any, for the services he rendered. Otherwise he is not at all a beneficiary of the business or trade etc., as the case may be, in which the company is engaged. Such benefit would be available only to the shareholders as they would only be entitled to share the profits earned by the company in the form of dividend as decided by the Board of Directors. In such case such Director, though is an agent of the company but he is more in the nature of an officer of the company and not in the capacity of limited ownership by way of shareholding. Such a Director, in our view, unless is guilty of misfeasance, fraud or acting ultra vires, we are not able to understand as to how he can be made responsible personally for the dues of the company even if we apply the doctrine of piercing the veil. If in such a case the veil is to be lifted, the persons behind the veil, at the best, would be the promoters of the company or those who have sought to obtain corporate personality as a sham or bogus transaction. Simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if lawful but not otherwise permissible, the corporate personality being the result of such fraudulent activity would have to be discarded but not otherwise. These are the things based on positive factual material and cannot be presumed in the absence of proper pleadings and material to be placed by the person who is pleading to invoke the doctrine of piercing the veil and to ignore the juristic personality of the corporate body. Once relevant material is made available by the authority or person concerned, thereafter it would be the responsibility of the other side to place material to meet the aforesaid facts but the mere fact that the company has failed to pay the Government dues or public revenue, that by itself would not invite the doctrine of piercing the veil and is not sufficient to ignore the statutory corporate personality conferred upon a company and make its Directors or shareholders responsible personally. 81. Neither in the notice nor in the counter affidavit filed in the present case any such case has been made out by the respondents and in a mechanical manner, the impugned notice has been issued to petitioner No. 2 on the analogy that responsibility of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in Uttar Pradesh the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration. The definition also includes a company or body corporate. 6. In the present case, it is not in dispute that the Company is the dealer registered under the provisions of the Act. 7. Section 38 of the Act refers to a situation where a limited company is wound up and any tax assessed on the company under this Act for any period, whether before or in the course of or after its liquidation, cannot be recovered. In such an event, every person who was a Director of the limited company at any time during the period for which the tax is due shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the Company." 17. In the present case also, the company is not under liquidation. 18. Similar view has been taken by the Division Bench of Allahabad High Court in the case reported in 2014 NTN (54) 315, titled as "Anupam Jalan vs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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