Tax Dues can be Recovered from Directors of Private Company u/s 39 of KVAT Act: Kerala HC [Read Order]

The Kerala High Court held that tax dues can be recovered from directors of private company under Section 39 of the Kerala Value Added Tax Act, 2003 ( KVAT Act ). 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 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, reads as “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.”

A Single Bench of Justice Dinesh Kumar Singh observed that “I do not find that the impugned notices suffer from any illegality, which requires this Court to interfere with, and therefore, the present writ petition is hereby dismissed.” Ahamed Fazil, counsel appeared for the petitioner and Jasmin M.M, Government Pleader appeared for the respondents.

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