9911796707
TMI Blog2024 (12) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... overy cannot be attributed to any gross negligence, misfeasance or breach of trust on his part. It is therefore necessary to give an opportunity of hearing to the Director whereas, in the facts of the case, the Director i.e. the husband of the petitioner had expired on 11.08.2017 which is much prior to the issuance of the initiation of the recovery proceedings. Moreover, in case of the C.V. Cherian [ 2012 (3) TMI 372 - GUJARAT HIGH COURT] it is held that ' As regards the faint plea of lifting the corporate veil, as per the settled legal position, the corporate veil is not to be lifted lightly. It is only when there is strong factual foundation for lifting the corporate veil that the question of examining the applicability of the principle of lifting such veil would be required to be examined. In neither of the two petitions raising the controversy, the authorities have passed any specific order fastening the liability on the Directors personally, much less any factual foundation has been laid to invoke the doctrine of lifting the corporate veil. Hence it is not necessary to dilate on the said principle any further.' The impugned recovery proceedings including the order of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arashtra. 5.2 The said Company was registered under the provisions of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as VAT Act ) as well as The Maharashtra Value Added Tax (hereinafter referred to as MVAT Act ) was assessed under the relevant provisions of the said VAT Act for the period of 2011-2012, 2012-2013 and 2013-2014. 5.3 It is case of the petitioner that the husband of the petitioner resigned as Director of the said Company on 7th February, 2013 and thereafter, he expired on 11th August, 2017. 5.4 It appears that the respondent-VAT Authorities meanwhile passed the Assessment orders for the period 2011-2012, 2012-13 and 2013-14 in case of the said Company raising the total demand of Rs.4,43,76,122/-. 5.5 The petitioner received a letter dated 6th September,2019 from Bhimashankar Co-op. Housing Society Limited informing the petitioner about the attachment of the residential premises occupied by the petitioner for recovery of the aforesaid outstanding dues of the Company in view of the communication dated 26th August, 2019 issued by the Sales Tax Officer respondent No. 3. 5.6 The petitioner therefore addressed a letter dated 9th September, 2019 informing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idation then also, no dues of the Company can be recovered against the properties of the Director much less when the Director has expired. 6.4 The reliance was also placed on the decision of the Hon ble Apex Court in the case of Shankar Rudra Vs. The State of Uttarkhand and Others rendered in Civil Appeal No.(s)10433 of 2024 dated 10th September, 2024 wherein, referring to para materia provisions of Section 12 (1) of the Uttarakhand Value Added Tax Act,2005, the Hon ble Apex Court has held that the liability of the Directors of a private limited company will arise when a private company is wound up after the commencement of the Act and therefore, there was no provision under which dues of a limited company could have been recovered from the Directors. It was therefore, submitted that there is nothing on record to show that the Company was taken into winding up [is already ordered to be wound up]. 6.5. It was further submitted that the reliance placed by the respondent on the provisions of Section 53 (3) of the VAT Act and Section 18 of the CST Act which are pari materia, no recovery can be made from the property of the Director assuming for a while that the Company is taken up for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is wound up and any tax, interest or penalty assessed under this Act on the company for any period, whether before or in the course of or after its liquidation, cannot be recovered, then every person who was a director of the private company at any time during the period for which the tax is due, shall jointly and severally be liable for the payment of such tax, interest or penalty, unless he proves to the satisfaction of the Commissioner that such non-recovery is be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. Explanation : - For the purposes of this section, the expressions company and private company shall have the meaning respectively assigned to them under clauses (i) and (ii) of sub-section (1) of section 3 of the Companies Act, 1956 (1 of 1956) Section 18 in The Central Sales Tax Act, 1956 18. Liability of directors of private company in liquidation:- Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), when any private company is wound up after the commencement of this Act, and any tax assessed on the company under this Act for any period, whether before or in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny factual foundation has been laid to invoke the doctrine of lifting the corporate veil. Hence it is not necessary to dilate on the said principle any further. 8.4. In case of Sadhna Ramchandra Jeswani (Supra), after referring to the decision of Previnbhai M.Kheni Vs. Assistant Commissioner of Income Tax and Others. reported in 353 ITR 585, it is held as under :- 7. Sub-section(1) of section 179 as can be noticed provides that notwithstanding anything contained in the Companies Act, 1956, where any tax due from a private company or other company during the period when such company was a private company cannot be recovered, then, every person who was a director of the said company at the relevant time shall be jointly and severally liable for the payment of such tax. Such recovery however can be avoided, if such a person proves that 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. 8. Fundamental requirement for applicability of section 179 of the Act, of-course is that tax dues cannot be recovered from the company. In case of Bhagwandas J. Patel (supra), Division Bench of this Court had take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, if so advised and, if the material at his command is sufficient to permit him to do so. 8.6. The Hon ble Apex Court in the case of Shankar Rudra (Supra) after considering the provision of Section 12 (1) of the Uttarakhand Value Added Tax Act, 2005 has held as under:- 7. On a plain reading of sub-section (1) of Section 12 of the Act, 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. 8. Therefore, when there was no provision under the Act under which dues of a limited company would 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. 8.7 Considering the above conspectus of law, we are of the opinion th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
