2024-VIL-980-AP
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VAT High Court Cases

Andhra Pradesh General Sales Tax Act, 1957 - Director's liability - Petitioner had purchased a property from the 5th respondent, who was director of the 6th respondent-company. The 6th respondent company was under liquidation and had arrears of sales tax under the APGST Act, 1957 – Respondent declared the purchase of the property by the petitioner as void under Section 17-A of the APGST Act, on the ground that the transaction was done to evade payment of tax - Whether the proceedings under Section 17-A of the APGST Act, 1957 declaring the sale of property as void are valid – HELD - Section 16-B of the APGST Act, 1957 provides that the director of a private company under liquidation can be held liable for the company's tax dues, but only after being given an opportunity to demonstrate that the non-payment of tax was not due to his negligence, misfeasance or breach of duty. In the present case, no such opportunity was given to the 5th respondent, who was the director of the 6th respondent company - in the absence of fixation of tax liability on the 6th respondent company and non-recovery of the same from the 5th respondent, the proceedings under Section 17-A were premature - the proceedings under Section 17-A could be initiated again, provided the tax liability of the 6th respondent company is first fixed on the 5th respondent and he is given an opportunity to demonstrate that he is not liable for the non-payment - the impugned order is set aside and the petition is allowed
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