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TMI Blog2004 (6) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions are violative of Articles 14, 19(1)(g) and 300A of the Constitution of India. The said petition also challenges the order dated 5.8.1989 passed by the Assistant Sales-tax Commissioner (Appeals), Baroda on the basis of which the Deputy Collector, Revenue Recovery, Bombay had initiated the proceedings for recovery of arrears of sales-tax dues of M/s. Choksi Plastics Pvt. Ltd. from the present petitioners who are the Directors of the said Company. The said proceedings are challenged on the ground that the Company and its Directors being separate legal entities, the liability of the Company to pay sales-tax cannot be fastened on the Directors personally or on the personal properties of the Directors, in absence of any provision to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f clause (a) thereof, there shall be paid by such dealer for the period commencing on the date of expiry of the aforesaid prescribed time or the specified date and ending on the date of payment of the amount of tax, simple interest at the rate of twenty four per cent per annum on the amount of tax not so paid or on any less amount thereof remaining unpaid during such period; Provided that where a penalty is levied under sub-section (6) of section 45 in respect of the difference and the period referred to in that sub-section, no interest shall be payable under this sub-section on such difference for such period. However, by Amendment Act No. Guj.20 of 2001, S. 6, the rate of interest is reduced from 24 per cent to 18 per cent w.e.f. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity arising under section 47(4-A) is absolute in nature. The rate of interest payable is fixed by the Legislature itself and no discretion in that behalf is left with the sales tax authorities. Once it is found that the dealer has not paid tax within the prescribed time the liability to pay interest arises under the Act and it is not open to the sales tax authorities to waive it for any reason. Separate provision has been made by the Legislature for levy of penalty. The rate of interest under section 47(4-A) is also not so high as to render it penal in nature. Considering the purpose for which the withheld amount can be utilised by the State Government, the prevailing rate of interest in the market, the rate of 24 per cent per annum cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid pronouncement of this Court, the prayers challenging the constitutional validity of the provisions of sub-section (4A) of Section 47 of the Gujarat Sales-tax Act, 1969 are hereby rejected. 8. Coming to the second controversy involved in Special Civil Application No. 243 of 1991 and also in Special Civil Application No. 7578 of 1991, Mr Hasurkar and Mr Mankad, learned counsel for the petitioners have submitted that since the Company and its Directors are separate legal entities, the liability of the Company to pay sales-tax on sale of goods effected by the Company cannot be fastened on the Directors personally or on the personal properties of the Directors. Referring to the provisions of Section 26, it is submitted that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate legal entities, it is open to the authorities to lift the corporate veil and to proceed against the personal properties of the Company. 10. Before dealing with the rival submissions, we would like to point out that in neither of the two petitions i.e. Special Civil Application No. 243 of 1991 and 7578 of 1991, the authorities have passed any specific order fastening the liability on the Directors for payment of sales-tax dues of the respective Companies. For instance, in the letter dated 31.8.1989, the Assistant Sales-tax Commissioner (Appeals) Baroda has informed the concerned Sales-tax Officer at Godhra that the appeal filed by Choksi Plastics Pvt. Ltd. was being dismissed on account of non-compliance with the order for deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an HUF and there is partition amongst various members or group of members; there is dissolution of a partnership firm and also in case of transfer of business in whole or in part. Unlike Section 179 of the Income Tax Act, 1961, there is no provision in the Sales-tax Act fastening the liability of the Company to pay its sales-tax dues on its Directors. 12. Reliance placed by the learned AGP on the provisions of Section 78 is misconceived. The section specifically deals with offences by companies and the criminal liability is fastened on the Directors who were in charge of and were responsible for the conduct of the business of the Company, but does not at all provide for any personal liability of the Directors to pay the sales-tax dues of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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