Tax to be recovered from Directors, if company fails to make payment [Read HC Order]

The petitioners are the directors of M/s. Absar Buildwares Private Limited company registered under the provisions of the Companies Act. The company failed to make payment of the dues under the Kerala Value Added Tax Act, 2003. When the taxing authorities could not recover the dues from the company, they issued a notice for recovery of the said tax dues against the petitioners, who are the directors. Section 39 of the Kerala Value Added Tax Act, 2003, empowers the taxing authorities to recover the tax dues from the directors of the private company if the company fails to make payment of the tax.

Section 39 of the Kerala Value Added Tax Act, 2003, reads as under:

“39. Liability of Directors of a Private Company:- Where any tax or other amount recoverable under this Act from any private company, whether existing or wound up or under liquidation, cannot be recovered for any reason whatsoever, every person who was a director of such company at any time during the period for which the tax or other amount is due under this Act shall be jointly and severally liable for the payment of such tax or other amount unless he proves that the non-recovery cannot be attributed to any negligence, misfeasance or breach of duty on his part in relation to the affairs of the company.”

Court Order:

The Court did not find that the impugned notices suffer from any illegality, that requires them to interfere, and therefore, the present writ petition was dismissed.

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