Directors are not personally liable for a company's tax dues unless proven negligent; recovery against a deceased director is unsustainable.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Apurva N. Mehta appearing for the petitioner and learned Assistant Government Pleader Mr. Raj Tanna appearing for the respondents.

2. Having regard to the controversy involved, which is in narrow compass, with the consent of learned advocates for the respective parties, the matter is taken up for final hearing.

3. Rule returnable forthwith. Learned Assistant Government Pleader waives service of notice of rule on behalf of the respondents.

4. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs:

“(A) YOUR LORDSHIPS may be pleased to admit and allow this petition.

(B) YOUR LORDSHIPS may be pleased to issue a Writ of Mandamus or any other appropriate Writ, Order or Direction quashing and setting aside the Revenue Recovery Certificate dated NIL issued by the Respondent No. 2 under Sec.3 of the Revenue Recovery Act, 1980 qua the Petitioner.

(C) YOUR LORDSHIPS may be pleased to direct the Respondent No. 2 and 3 to lift the attachment made on immovable property being Building No. A-7, Room No. 103, Bhimashankar Co-Op-Housing Society Ltd., Sector 19-A, Nerul, Navi Mumbai.

(D) Pending hearing and final disposal of this petition, YOUR LORDSHIPS may be pleased to stay further implementation of Revenue Recovery Certificate dated Nil (Annexed at Annexure A) issued by the respondent No. 2 under Section 3 of the Revenue Recovery Act, 1980.

(E) Ex-parte ad-interim relief in terms of Para (D) may kindly be granted.

(F) Such other and further relief/s as may be deemed fit in the facts and circumstances of the present case may kindly be granted.

5.1 The brief facts of the case are that the husband of the petitioner was a Director of M/s. Oren Kitchen Appliances Private Ltd. which came to be incorporated on 22nd September, 2009 in the State of Maharashtra.

5.2 The said Company was registered under the provisions of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as “VAT Act”) as well as The Maharashtra Value Added Tax (hereinafter referred to as “MVAT Act”) was assessed under the relevant provisions of the said VAT Act for the period of 2011-2012, 2012-2013 and 2013-2014.

5.3 It is case of the petitioner that the husband of the petitioner resigned as Director of the said Company on 7th February, 2013 and thereafter, he expired on 11th August, 2017.

5.4 It appears that the respondent-VAT Authorities meanwhile passed the Assessment orders for the period 2011-2012, 2012-13 and 2013-14 in case of the said Company raising the total demand of Rs. 4,43,76,122/-.

5.5 The petitioner received a letter dated 6th September, 2019 from Bhimashankar Co-Op. Housing Society Limited informing the petitioner about the attachment of the residential premises occupied by the petitioner for recovery of the aforesaid outstanding dues of the Company in view of the communication dated 26th August, 2019 issued by the Sales Tax Officer-respondent No. 3.

5.6 The petitioner therefore addressed a letter dated 9th September, 2019 informing the respondent No. 3 that her late husband had already resigned as a Director and further contended that the Company and the Director are separate legal entities and the dues of the Company cannot be recovered from the property of the Director by attaching the same.

5.7 Thereafter, the petitioner again by letter dated 16.12.2019 addressed to the respondent No. 2-Commercial Tax Officer(6) Unit-74, Vapi as well as the respondent No. 3 requested to lift the attachment made on the residential property of the petitioner.

5.8 Inspite of the aforesaid representations, no action was taken and therefore, the petitioner again by letter dated 4.12.2021 reiterated the request to lift the attachment over the subject property.

5.9 The petitioner thereafter, obtained the relevant copies of the recovery certificate issued on 9.10.2018 by the respondent No. 2 addressing to The Commissioner, Office of the Commissioner State Tax, Mumbai under