The Managing Director cannot be held liable for the tax due by the company under the Sales Tax Act.

1. The 2nd petitioner is the Managing Director. according to the respondents. of the 1st petitioner-Company which is a "registered dealer" within the meaning of the Kerala General Sales Tax Act. for short. the Sales Tax Act.

2. By way of arrears of Sales Tax. Employees Provident Fund and Employees State Insurance. the Company had to pay a sum of Rs. 16.01.659.10 to the Government.

3. May be that the Revenue was not successful in realising the arrears of tax etc. from the Company. and that perhaps may be the reason for the Revenue to initiate proceedings for recovery of the aforesaid dues from the 2nd petitioner. Accordingly the 1st respondent served on the 2nd petitioner a notice under S.65 of the Kerala Revenue Recovery Act. 1968. for short. the Recovery Act. calling upon him to show cause why a warrant of arrest shall not be issued against him since the Company has failed to remit the said dues. The 2nd petitioner by his reply dated 29th June. 1985 has given the explanation thus:

"I am in receipt of your letter No. R8 20586/84 dated the 19th June. 1985. The amounts mentioned in your letter are due and payable by Punalur Paper Mills Ltd. on account of Sales Tax. Provident Fund. ESI etc. For liability of a Public Limited Company the Directors or Officers cannot be held responsible. Such liabilities are realised from the Company's assets only. including Government revenue."

In the course of the enquiry it would appear that the 2nd petitioner agreed to pay a sum of Rs. 3.40.143 towards the Employees Provident Fund and Employees State Insurance dues. while he claimed a sum of Rs. 1.5 crores by way of refund due to the Company from the Government. He had also stated that the refund claimed would be sufficient security for the balance tax due by the Company. The petitioners admittedly have paid the above Rs. 3.40.143/-and the balance tax due from the 1st petitioner-Company at the relevant time was only Rs. 10.59.000/-. This represented the arrears of sales tax.

4. After enquiry. the 1st respondent found as follows:

"There is no justification for not remitting this to Government. He has no convincing explanation as to why the sales-tax amount already collected is being withheld. In the circumstances. there is no reason to believe that the defaulter is not wilfully refusing to pay to Government the amount which he owes. Public interest warrants that he be committed to civil prison.

I. therefore. find that Sri L. N. Dalmia. Managing Director. Punalur Paper Mills. Punalur is to be arrested and committed to civil prison for a period of 30 days for wilfully evading payment of arrears due to Government."

5. The 2nd petitioner accordingly was arrested and put in civil prison.

6. Ext. P3 is under challenge in this Original Petition.

7. Before I go into the merits of the case. I shall state the law. applicable to the case. Under the Sales Tax Act. a registered dealer whose total turnover for a year is not less than the amount specified in S.5 of the Act. is bound to pay tax on the said taxable turnover for that year. The tax. a dealer is liable to pay. is determined in terms of S.16 of the Act. The tax thus assessed shall be paid by the assessee. that is the dealer. within the time specified in the notice of demand. the Revenue would serve on him in Form No. 14B prescribed under R.20 and 21. If the assessee commits default in paying the tax in terms of the demand notice. the assessee will be declared a defaulter and on his being declared a defaulter. recovery proceedings will be initiated against him. S.23 provides for recovery of the tax from a defaulter. The Section provides that if default is made in paying the tax according to the notice of demand. the whole amount outstanding on the date of the default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax or other amount under the Sales Tax Act. The modes of the recovery of tax are as prescribed under sub-s. (2) of S.23. He