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2015 (11) TMI 1014 - HC - VAT and Sales TaxRecovery of outstanding sales tax dues of respondent which is in liquidation from the directors as an arrears of land revenue - Violation of principle of natural justice - Held that:- recovery proceedings can be initiated in terms of the specific provisions in the statute. There exists no particular provision either under the Act or the VAT Act whereby the liability of the private limited company can be fastened on the directors of the said company and recovered from them. Unlike section 179 of the Income-tax Act, 1961 where a director of a company can be held liable for recovery of tax due from the company on fulfilment of conditions enumerated therein or even under section 18 of the CST Act which provides for recovery from the director of a private limited company which is in liquidation under certain circumstances. - recovery on account of sales tax liability under the Act or VAT Act of M/s. Bhagwati Wooltex Pvt. Ltd. relating to exemption period cannot be recovered from the petitioner. Recovery of CST - In the absence of taking any specific recourse to proceedings under section 18 of the CST Act and passing of any valid order for effecting recovery of CST from the directors of the private limited company in liquidation, the proceedings relating to recovery of arrears of CST from the petitioner are held to be not permissible in law. Further, the respondents have not shown that the amount of tax recoverable under the CST Act cannot be recovered from the company. It is also not shown as to what efforts were made to recover the arrears of CST from the assets of the company. Thus, recovery of CST from the petitioner is unsustainable. However, it shall be open for the respondents to proceed to recover the amount on account of CST after taking proper action under section 18 of the CST Act and considering the notification dated September 4, 1995 (annexure P11) issued under section 8(5) of the CST Act. Recovery of Surety - liability of the petitioner on account of non payment of the amount due from the principal where he had stood surety cannot be doubted. However, in the absence of any notice having been issued before serving annexure P9, the action cannot be legally sustained being violative of principles of natural justice. - Decided in favour of petitioner.
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