Are Directors Personally Liable for Company’s Tax Dues?
In Anita Grover v. CCE [2013] 22 GSTR 264 (Delhi), the petitioner, an erstwhile director of the company, owned three proper¬ties. After she had resigned from the post of director of the company on April 2, 199, she received three notices informing that Government dues under the Customs Act, 1962, with interest were to be recovered from the company and that the property which belonged to the company was not to be allowed to be disposed of without consent of the respondents. In the meanwhile, the peti¬tioner had sought to transfer by way of gift one of the properties belonging to her in favour of her sons, but she was informed by the sub-registrar that since certain proceedings for recovery of Government dues were pending against the property, it could not be allowed to be transferred/disposed of.
On a writ petition, the High Court held that under the provisions of the 1962 Act and the Customs (Attachment of Property Defaulters for Recovery of Govern¬ment Dues) Rules, 1995 it was only the defaulter against whom steps could be taken under the Rules. The company was the defaulter from whom dues were recoverable under the 1962 Act. There was no averment that the com¬pany had been or was being wound up. There could not be separate juristic personality of an existing company and its former director; the dues recover¬able from the former could not be recovered from the latter in the absence of a statutory provision. The notices and action of the customs authorities were in violation of article 265 of the Constitution of India, as they sought to recover tax dues of one from another, without authority of law. They also amounted to illegal deprivation of the petitioner’s property without authority of law under article 300A of the Constitution of India. The notices were to be quashed.
