The judgment of the Court was delivered by

YOGESHWAR DAYAL, C.J. - W.P. No. 18277 of 1988 has been filed by Ramnarayan Shahu, one of the directors of M/s. Western India Gunnies Pvt. Ltd., Hyderabad and W.P. No. 18168 of 1988 has been filed by M/s. Western India Gunnies Pvt. Ltd. represented by its manager.

Both the writ petitions are directed against the order of Commercial Tax Officer (FAC), Mehdipatnam Circle, Hyderabad, whereby the said Commercial Tax Officer had forwarded a demand for recovery of Rs. 2,51,577 towards arrears of sales tax for the assessment years including 1974-75, 1977-78, 1978-79, 1979-80 and 1980-81, due towards arrears of A.P. general sales tax and Central sales tax from M/s. Western India Gunnies Pvt. Ltd. to be recovered from the petitioner Ramnarayan Shahu and two other directors of the said company. The learned counsel appearing for the directors personally in W.P. No. 18277 of 1988 submits that under section 16-B of the Andhra Pradesh General Sales Tax Act, 1957, no recovery can be effected from the directors of a private limited company except on its liquidation and winding up process.

Section 16-B of the Andhra Pradesh General Sales Tax Act provides as under :

"16-B. Liability of directors of private company in liquidation. - When any private company is wound up and any tax assessed on the company under this Act for any period, whether before or in the course of or after its liquidation, cannot be recovered, then, 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 the payment of such tax, unless he 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. (Inserted by Act 18 of 1985 with effect from July 1, 1985)."

The submission of the learned counsel for the petitioner is that in respect of tax assessed and due from a private limited company no demand could have been forwarded by the first respondent to the second respondent for recovery of arrears of tax against the directors except in the manner provided in section 16-B. We would accordingly quash the impugned order of the first respondent dated July 19, 1988 and issue a writ of mandamus restraining the respondents from proceeding against the petitioners, who are directors of M/s. Western India Gunnies Pvt. Ltd. The W.P. No. 18277 of 1988 is allowed. No costs. Advocate's fee Rs. 150.

W.P. No. 18168 of 1988 :

At this stage, the learned counsel for the petitioner-company wishes to withdraw W.P. No. 18168 of 1988. Accordingly, W.P. No. 18168 of 1988 is dismissed as withdrawn and there will be no order as to costs. Advocate's fee Rs. 150.

It is however made clear that there is no bar for recovering the tax from the private limited company.

W.P. No. 18277 of 1988 allowed.

W.P. No. 18168 of 1988 dismissed as withdrawn.