Punjab-Haryana High Court
Sandeep Sood vs Assistant Collector 1St Grade Cum ... on 14 November, 2024
Author: Sanjeev Prakash Sharma
Bench: Sanjeev Prakash Sharma
Neutral Citation No:=2024:PHHC:148492-DB
CWP No. 20120 of 2023 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No. 20120 of 2023 (O&M)
Reserved on : 13.11.2024
Date of Pronouncement : 14.11.2024
Sandeep Sood ...Petitioner
Versus
Assistant Collector 1st Grade-cum-Excise & Taxation Officer,
U. T. Chandigarh ...Respondent
CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
HON'BLE MR. JUSTICE SANJAY VASHISTH
Present: Ms. Radhika Suri, Senior Advocate assisted by
Mr. Abhinav Narang, Advocate and
Ms. Parnika Singla,, Advocate, for the petitioner.
Mr. Ajay Jagga, Additional Standing Counsel
Counsel,
U. T. Chandigarh, for the respondent.
***
SANJEEV PRAKASH SHARMA, J.
This writ petition has been preferred by the petitioner assailing
the action of the respondents in freezing his saving bank accounts
maintained with Bank of Baroda, Manali Branch, Punjab National Bank,
Chandigarh Branch, UCO Bank, Manali Branch with the purpose to recover
the VAT dues of M/s East Bourne World Cuisine Private Limited, wher
wheree the
petitioner was a former director and prays
pray for quashing the attachment notice
dated 12.02.2021.
2. Learned counsel for the petitioner submits that recovery
proceedings can be initiated in terms of specific provisions of the statute.
There exists no particular provisions under the Punjab Value Added Tax
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Act, 2005 as extended to Chandigarh (hereinafter to be referred as 'the Act')
whereby the liability of the private limited company can be fastened on the
director of the company, especially when the co
company is functional. Also
submits that the director would be liable for recovery only under Section 18
of the Central Sales Tax Act, 1956 in cases where the private limited
company has gone into liquidation and has been wound up.
3. Learned Senior counsel has invited our attention to a recent
judgment of Hon'ble the Supreme Court in Civil Appeal No. 10433 of 2024
(arising out of SLP (Civil) No. 20534 of 2019) - Shankar Rudra vs The
State of Uttarakhand and others, decided on 10.09.202
10.09.2024,
4, wherein the
provisions of Section 12(1) of the Uttarakhand
Ut khand Value Added Tax Act, 2005
were examined by the Court and it was held as under:
under:-
"7. On a plain reading of sub
sub-Section
Section (1) of Section 12
of the Act, the liability of the Directors of a private
company will arise when a private company is wound up
after the commencement of the Act. Therefore, Section
12(1) will have no application as an order of winding up
has not been produced.
8. Therefore, when there was no provision under the
Act under which dues of a limited company could have
been recovered from its Directors, the third respondent
was not justified in issuing the recovery certificate and
demand notice against the appellant. These crucial
factors have been ignored by the High Court. It ought to
have been noted by the High Court that an attempt to
recover tax payable by the Company from the appellant
from its inception was illegal and, therefore, the
appellant ought not to have been driven to the remedy of
preferring an appeal.
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9. Accordingly, the Appeal succeeds. The impugned
judgments and orders of the learned Single Judge and the
Division Bench are set aside. The notice of recovery
dated 6th June, 2019 issued by the third respondent is
hereby quash and set aside.
aside."
4. Learned counsel for the petitioner further submits that Section
83 (3) of the Act also similarly provides for liability of a director in case a
company which is wound up and is pari materia to Section 12 of the
Uttarakhand
arakhand Value Added Tax Act, 2005, as noticed by the Supreme Cour
Courtt
(supra).
5. Learned counsel for the respondent submits that the petition is
pre-mature
mature and the proceedings are to be taken against the company.
6. We have considered the pleadings and find that as per the reply
filed by the respondent, the company has
has itself filed an appeal before the
appellate authority, which is still pending. It is also noticed that the company
is functional and the petitioner is no more a director of the said company. In
the circumstances, there was no occasion for the respondent to attach the
bank accounts of the petitioner for recovery of its dues as against the
concerned company. The provisions of Section 83(3) of the Act reads as
under:-
"83 (3) Notwithstanding anything contained in the
Companies Act, 1956, when any private co
company
mpany is
wound up and any tax, interest or penalty assessed under
this Act on the company 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, interest or penalty, unless such
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person proves to the satisfaction of the Commissioner or
the designated officer that non
non-recovery
recovery cannot be
attributed to any gross neglect, misfeasance or breach of
duty on his part in relation to the affairs of the company.
Explanation.-For
For the purpose of this section, the
expression 'private company' shall have the meaning,
assigned to it under section 3 of the Companies Act, 1956
(1 of 1956)".
A perusal of the said provisions also reflect that the recovery from the
director of a company can only be made when such a company has been
wound up. Even under the Companies Act,
Act, 1956
1956,, the provision for recovery
from the director is not available at the stage prior to winding up of the
company.
7. There is also no case of allegation of mismanagement of the
company and in such circumstances also, the order would have to be
obtained from
om the concerned NCLT.
8. Even earlier on 05.09.2024, we have directed the respondent to
decide the appeal of the company which has not been decided even till date.
Be that as it may, the aforesaid fact should not detain us from declaring the
attachment of the saving accounts of the petitioner as bad in law as we find
that it is a clear case of arbitrary exercise of power by the respondent and is
wholly without any authority.
9. The order of attachment of the saving accounts of the petitioner
and the notice
tice dated 12.02.2021 are quashed and set aside. The petitioner is
held to be entitled to receive a sum of ` 1 lac as penal cost for wrongful
attachment of his bank accounts putting him in unnecessary financial
distress. The amount of ` 1 lac shall be paid by the respondent authorities
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and deposited in his bank account within two months, failing which interest
@ 18% shall also be paid,
paid, which may be recovered from the concerned
delinquent officer, who has arbitrarily issued attachment order without
authority.
11. Accordingly, the writ petition is allowed with cost as above.
12. All pending applications stand disposed of.
(SANJEEV PRAKASH SHARMA)
JUDGE
14.11.2024 (SANJAY VASHISTH)
vs JUDGE
Whether speaking/reasoned Yes/No
Whether reportable Yes/No
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