CHAMUNDEESWARI Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) THE petitioners have put in issue the distraint proceedings initiated by the respondent, the Commercial Tax Officer to recover a sum of Rs. 31,03,345/- towards arrears of sales tax for the assessment years from 1991-92 to 1994-95. It is the case of the petitioners that the assessee is the public limited company incorporated under the Companies Act 1956 under the certificate No. 12819 of 1986 amended on 13. 11. 1987. The company and its factory have been taken possession by the Tamilnadu Industrial Investment Corporation under Section 29 of the State Financial Corporation Act, 1995 and the company is no more in existence. Further, the petitioners have also resigned from the directorship on and from 18. 06. 1996 and 23. 05. 1996 respectively and to that effect resolution has been passed by the directors of the company. As such from that dates the petitioners ceased to be the directors of the company. All of a sudden, proceedings under section 8 of the Revenue Recovery Act has been issued against the petitioners. There is absolutely no provision whatsoever in the Tamil Nadu General Sales Tax Act to recover the tax due in respect of a company from its directors, as it is well recognised that a company is a separate legal entity by itself and if any recovery has to be made from the company, that has to be done against the properties of the company and not against the properties of its directors. On this ground, the writ petition has been filed challenging the distraint proceedings.

(2.) MR. SHANMUGASUNDARAM, learned counsel for the Government argued for sustaining the orders by submitting that the company can be treated as Association of Persons and as such and under section 19a of the Tamil Nadu General Sales Tax Act proceedings can be initiated against the persons who asserted themselves as Association of persons.

(3.) HEARD the learned counsel on either side and perused the materials available on record and went through the relevant provisions in the statute.