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2022 (9) TMI 385 - HC - VAT and Sales TaxValidity of demand and assessment notice - liability of Directors / Shareholders - limited to the extent of face value of shares subscribed by each member and amount remaining unpaid on them for the time being - whether there are any specific statutory provisions to the effect that liability for duty of the company can be fastened upon the Directors of the company? - HELD THAT:- It will be seen from the provisions of Section 89 of the MGST Act, Section 18 of the CST Act and Section 44(6) of the MVAT Act that there are specific provisions that fastened upon the Directors of a company liability for duty of the company - Admittedly there exists no provision in the BST Act under which the liabilities/dues of the company recovered/fastened upon from the Directors. There is no discussion in the impugned order as to how the amounts could be recovered under the old law. Petitioner has, in his reply to the show cause notice submitted that the amounts were not even recoverable under the BST Act or CST Act but still that has not been dealt with at all in the impugned order. The impugned order simply states that the conjoint reading of Section 142(8) and Section 89 of the MGST Act leaves no doubt that if recovery cannot be made under the earlier law, i.e., the BST Act and CST Act, the same can be recovered under the MGST Act and Section 89 will squarely apply. Thus, it is settled law that liability for duty of the company cannot be fastened upon the Directors of the company unless there is statutory provision to that effect. Since the BST Act did not contain any provision to the effect making the Directors liable for the dues of the company, no amount is recoverable under the BST Act from the Directors of the company for the dues recoverable from the Company. There were no provisions in the BST analogous to Section 44(6) of the MVAT Act or Section 18 of the CST Act or Section 89 of the MGST Act - Undoubtedly Section 18 of the CST Act is a statutory provision to the effect that liability for dues of the company can be fastened upon the Directors of the company. There are total non application of mind by Respondent No.3 in as much as consequential notice issued to petitioner is issued under BST and CST, Act whereas the impugned order relies upon provisions of the MGST Act, to recover the dues of the company from petitioner - Strangely, the impugned order is accompanied with the Notice of Demand issued under Section 38 of the BST Act. The second consequential notice is, we find, not even a Notice of Demand issued under the CST Act, but rather Notice of Final Assessment in Form VIII(B), i.e., the Assessment Order itself. Respondent No.3 in consequence of the impugned order, has issued Assessment Order under the CST Act as opposed to a Notice of Demand. This indicates non application of mind. Petition disposed off.
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