Notification Sales tax dues of company can't be recovered from directors of company in absence of statutory provision: Bombay High Court

Financial Year: 2022

Sales tax dues of company can't be recovered from directors of company in absence of statutory provision: Bombay HC

Mukesh D. Ramani v. State of Maharashtra (2022) (Bombay)

The petitioner was a director of a company and the department issued notice demanding sales tax dues of company from the director. The orders were passed to recover dues under the Bombay Sales Tax Act (BST Act) by relying upon the provisions of section 142(8) and section 89 of the GST Act. It filed writ petition challenging the recovery of dues.

The High Court noted that the liability for duty of the company can't be fastened upon the directors of the company unless there is statutory provision to that effect as per the settled position in law. In the instant case, amount was demanded by invoking section 142(8) of the GST Act but this section would only be applicable when the amount first becomes recoverable in terms of the “existing law".

However, under the BST Act, there didn't exist any section which provided for dues of the company to be recoverable from its Directors. Therefore, it was held that no amount would be recoverable under the BST Act from the directors of the company for the dues recoverable from the company.

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