IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ****

Date of Decision: 17.11.2025 SURINDER KUMAR GUPTA ...Petitioner Vs.

STATE OF HARYANA AND ORS …Respondents CORAM:- HON'BLE MR. JUSTICE JAGMOHAN BANSAL HON'BLE MS. HARPREET KAUR JEEWAN Present:- Mr. Rishab Singla, Advocate and Ms. Urvi Khanna, Advocate for the petitioner Ms. Mamta Singla Talwar, DAG Haryana ***

JAGMOHAN BANSAL, J. (ORAL)

1. The petitioner through instant petition under Articles 226/227 of the Constitution of India is seeking setting aside of notice dated 24.09.2004 (Annexure P-4) whereby he has been directed to deposit Rs.61,55,507/- towards Haryana General Sales Tax (for short ‘HGST’) and Central Sales Tax (for short ‘CST’).

2. The petitioner was one of the Directors of a private limited company namely M/s Pataudigold Cement Private Limited. Said company was promoted by Mr. Parveen Kumar Garg in January’ 1995 who was Managing Director. The petitioner was 20 years old and was a college-going student. He made investment on the advice of Mr. Parveen Kumar Garg. The company applied for eligibility certificate under Rule

28A for exemption from payment of sales tax. The company started commercial production on 03.08.1996. The respondent did not decide exemption application and it became impossible for the company to run business without exemption. The promoters and directors made a substantial investment in land, building and plant and machinery. The company incurred losses and out of frustration, Mr. Parveen Kumar Garg committed suicide on 14.01.1998. After the death of Mr. Parveen Kumar Garg, eligibility certificate was issued w.e.f. 03.08.1996. The company on account of closure of business did not press for exemption certificate. The Assessing Authority made ex parte assessment as non-exempted dealer for 3 assessment years i.e. 1996-97 1997-88 1998-99. The Assessing Authority issued certificate to Assistant Collector, New Delhi for recovery of assessed tax, interest and penalty. The petitioner filed reply on 11.10.2004 disclosing that no money can be recovered from shareholders/directors. The respondent issued letter dated 11.10.2004 stating that as per Section 18 of CST Act, demand pertaining to 1996-97 to 1998-99 can be recovered from him. Demand is attributable to his gross negligence. The petitioner filed reply dated 16.11.2004 disclosing that tax cannot be attributed to gross negligence, misfeasance or breach of duty on his party in relation to affairs of the company. Despite replies of the petitioner, the Assessing Authority issued notice dated 14.01.2005 and 18.02.2005 directing the petitioner to make payment failing which proceedings under Land Revenue Act will be initiated.

3. Learned counsel for the petitioner submits that respondent created liability against the company under HGST Act as well as CST Act. There is no provision under HGST Act to recover liability of a private company from its Directors. In case of CST Act, liability of a private limited company can be recovered from its Directors if company is wound up. In the instant case, the company was not wound up at the time of issuing impugned notices, thus, Section 18 of CST Act was inapplicable. This Court by order dated 05.09.2005 permitted department to afford opportunity to petitioner before making an order under Section 18 of CST Act. The respondent never issued notice under Section 18 of CST Act. As per data available on the official website of Delhi High Court, winding up petition was filed against the company in 2005 which was disposed of vide order dated 13.09.2005.

4. Learned State counsel expressed her inability to point out any statutory provision under HGST Act empowering assessing authority to recover dues of a private limited company from its Directors. She submits that as per Section 18 of CST Act dues of a private limited company may be recovered from its Directors. There were two directors of the company. The Managing Director passed away and petitioner was the sole surviving d