In absence of any specific provision in statute, duty/penalty liability of Company cannot be recovered from assets of its director

By Bimal Jain Excise Duty Articles December 30, 2015

Case Name: Krishan Kumar Vs Union of India and Anothers
Appeal Number: Only available for paid members

CA Bimal Jain

Facts:

Krishan Kumar (the Petitioner) is at present non-working director of Spectec Building Products Pvt. Ltd. (the Company). The Department has alleged that the Company was indulging in clandestine removal and undervaluation of goods manufactured by it and thereby, confirmed demand of duty with interest & penalty on the Company along with imposing penalty under Rule 26 of the Excise Rules on the Petitioner.

The Petitioner has deposited its amount of penalty but the Company did not comply with the Order of the Department. Thereafter, the Petitioner being the director of the Company had been asked to deposit the amount recoverable from the Company.

Held:

The Hon’ble High Court of Punjab & Haryana, relying upon the case of Subhash Goyal Vs. State of Haryana and others [2014(4) PLR 343], held that it is well settled law that in the absence of any specific provision in the statute, the duty/penalty liability of the Company cannot be recovered from the assets of its director. Hence, the director is not personally liable towards liability of the Company.

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