Sales tax dues of company can’t be recovered from directors of company in absence of statutory provision: Bombay HC

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  • Last Updated on 10 November, 2022

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Sales tax dues

Case Details: Mukesh D. Ramani v. State of Maharashtra - [2022] 144 taxmann.com 135 (Bombay)

Judiciary and Counsel Details

    • K.R. Shriram & Gauri Godse, JJ.
    • Sriram Sridharan for the Petitioner.
    • Ms Jyoti Chavan, Himanshu Takke & Dushyant Kumar AGP’s for the Respondent.

Facts of the Case

The petitioner was a director of a company and the department issued notice demanding sales tax dues of company from the director. The orders were passed to recover dues under the Bombay Sales Tax Act (BST Act) by relying upon the provisions of Section 142(8) and Section 89 of the GST Act. It filed writ petition challenging the recovery of dues.

High Court Held

The High Court noted that the liability for duty of the company can’t be fastened upon the directors of the company unless there is statutory provision to that effect as per the settled position in law. In the instant case, amount was demanded by invoking Section 142(8) of the GST Act but this section would only be applicable when the amount first becomes recoverable in terms of the “existing law”.

However under the BST Act, there didn’t exist any section which provided for dues of the company to be recoverable from its Directors. Therefore, it was held that no amount would be recoverable under the BST Act from the directors of the company for the dues recoverable from the company.

List of Cases Reviewed

List of Cases Referred to

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