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Case Law Details

Case Name : Firos C. A. Vs State of Kerala (Kerala High Court)
Appeal Number : WP(C) No. 10995 of 2023
Date of Judgement/Order : 19/02/2024
Related Assessment Year :

Firos C. A. Vs State of Kerala (Kerala High Court)

Introduction: In the case of Firos C. A. Vs State of Kerala, directors of M/s. Absar Buildwares Private Limited petitioned the Kerala High Court seeking relief from tax dues imposed on them after the company failed to make payments under the Kerala Value Added Tax Act, 2003.

Detailed Analysis: The directors argued against the recovery of tax dues, citing Section 39 of the Kerala Value Added Tax Act, 2003, which holds directors jointly and severally liable for tax payments if the company fails to pay, unless they prove non-recovery wasn’t due to negligence, misfeasance, or breach of duty on their part.

Despite the petitioners’ contentions, the court found no illegality in the notices issued by taxing authorities, upholding the directors’ liability for tax payments. Section 39 empowers authorities to recover tax dues from directors if the company cannot pay, regardless of its status (existing, wound up, or under liquidation).

Conclusion: The Kerala High Court’s decision emphasizes directors’ joint liability for tax payments when companies fail to fulfill their obligations under the Kerala Value Added Tax Act. This ruling underscores the importance of directors’ oversight and diligence in ensuring tax compliance within their companies.


The present writ petition has been filed by the petitioners seeking the following reliefs:

(i) To call for records leading to Exhibit P1 and Exhibit P2 and quash the same by issuing a writ in the nature of certiorari or any other appropriate writ order or direction

(ii) To direct Respondent Nos.1 to 4 to recover the amount allegedly dues as per Exhibit P1 and Exhibit P2 to recover from the available assets of the Company namely, M/s. Absar Buildwares Private Limited.

(iii) To declare that petitioners are not liable to pay amount due as per Exhibit P1 and Exhibit P2.

(iv) To dispense with the filing of English translation of Exhibits in Malayalam/Vernacular language.

(v) To grant such other reliefs in favour of the petitioners as this Hon’ble Court may deem fit to grant on the facts and in the circumstances of the case.

Directors Liable If Company Fails to pay tax under Kerala VAT Kerala HC

2. Heard Ahamed Fazil, learned counsel for the petitioner as well as Ms. Jasmin M.M, learned Government Pleader for respondents.

3. The petitioners are the directors of M/s. Absar Buildwares Private Limited company registered  under the provisions of the Companies 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, 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.

4. 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.”

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.

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April 2024