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2022 (11) TMI 1273 - HC - VAT and Sales TaxRecovery of arrears of tax from the ex-directors - Attachment of property belonging to the petitioner - legality of the notice - violation of principles of natural justice - HELD THAT:- A reading of Section 16B of Revenue Recovery Act, 1864 indicates that the liability of the Directors of a private company would arise only when the a private company is wound-up and any tax assessed on the company under the Act for any period before or in the course of or after its liquidation cannot be recovered. Thus, every person who was a Director of the private company at any time during the period for which the tax is due shall be jointly and severally liable for payment of said tax. Further the provisions of Section 16B of the Act does not provide for recovery from the Director automatically in the event of failure to recover from the private limited company. On the other hand the provision specifies that if the Director 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, no recovery can be made from the said Director. Since the 2nd respondent-Company is not wound-up, no recourse can be made to recover the dues from the Director, who either continues to be on Board or ceases to be Director of the Company, inasmuch as the respondents-authorities can take steps to recover such arrears from the 2nd respondent-Company - Since the petitioner in the present case is an Ex-Director of the 2nd respondent-Company, which admittedly is not wound-up, the impugned notice of attachment for recovery of arrears of tax cannot be sustained. The impugned notice of attachment for recovery of arrears of tax is set aside - Petition allowed.
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