STEPHEN VERGHESE Vs. STATE OF U.P.

JUDGEMENT

(1.) By means of the present writ petition, the petitioner has challenged the recovery certificates issued by the Trade Tax Officer, Noida, Gautambuddh Nagar/respondent no. 4 all dated 28th November, 2006 for the assessment years 1990-91, 1991-92 and 1992-93 for a sum of Rs.19,42,398/-, Rs.22,97,089/- and Rs.5,04,589/- respectively.

(2.) The challenge to these recovery notices are on the allegations that earlier M/s Stejac Video Products was a proprietorship concern and was having eligibility certificate no. 615/ADI/STE/89 dated 11th May, 1989 under which the turnover of the said proprietorship concern was exempted from payment of trade tax as envisaged under Section 4-A of the U.P. Trade Tax Act (hereinafter referred to as ''the Act'). On 16th November, 1990, the said proprietorship concern was converted into Private Limited Company having the petitioner as one of the directors. The said company did not charge any sales tax/trade tax from the customers. The Company on 18th December, 1990 filed an application under Section 4-A(2-B) of the U.P. Trade Tax Act for claiming exemption from payment of trade/sales tax for remaining period but the same was rejected. Thereafter an application was filed before the Commissioner of Sales Tax through registered post for continuation of eligibility certificate. It appears that the Assessing Officer framed ex parte assessment orders for these assessment years. Consequent thereto, the impugned recovery notices have been issued. The respondents cannot issue recovery certificate against the petitioner for the dues of the Company as the petitioner was a Director in the said Private Limited Company. The Company has been wound up by the order passed by the Delhi High Court. The petitioner did not offer any personal guarantee to the Trade Tax Department and as such, the recovery of the Company dues from the personal assets of the petitioner is illegal, hence the present writ petition.

(3.) In the counter affidavit filed by the respondents, it has been stated that the petitioner was one of the Directors of the Private Limited Company holding 95% shares of the Company. The eligibility certificate was granted to the proprietorship concern but it was not granted to the successor Company nor the petitioner could place any order under Section 4-A (2-B) of the Act before the Assessing Authority granting exemption to the assessee Company, the assessment orders were validly passed for all these assessment years. It has been further stated that the liability of the assessee Company is both i.e. under U.P. Trade Tax Act/Sales Tax Act as well as under the Central Sales Tax Act. In substance, the recovery proceedings against the petitioner to recover the outstanding dues of the assessee Company was justified by the respondents on the ground that the proprietor firm had became the Managing Director of the Company having 95% share in the Company. It was further stated that the successor Company had not followed the rules properly and no application under Section 4-A(2-B) of the Act was received in the Commissioner's office within the period of 60 days from the date of succession.