Commercial Tax Officer Vs Vardhanan P. R (Kerala High Court)
The Kerala High Court partly allowed the Revenue’s appeal against the judgment of the learned Single Judge in W.P.(C) No. 17598 of 2022 concerning recovery proceedings against a person alleged to be a Director of the assessee company under Section 39 of the Kerala Value Added Tax (KVAT) Act.
The Revenue contended that the Single Judge had incorrectly placed the burden on the authorities, arguing that the Director must establish that non-recovery of tax from the company was not attributable to his negligence, misfeasance or breach of duty. The respondent submitted that the Single Judge had merely directed compliance with Section 39 of the KVAT Act, which permits recovery from a Director only if he held that position when the tax became due and allows such person to prove that the non-recovery was not attributable to negligence, misfeasance or breach of duty. The respondent also maintained that he was not a Director when the tax liability arose.
The High Court noted that the Single Judge had set aside the recovery notices for non-compliance with the procedure under Section 39 and had directed the authorities to ascertain whether the company possessed recoverable assets before considering proceedings against the respondent, while examining his defence regarding absence of negligence and his contention that he was not a Director at the relevant time.
