IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 25TH JANUARY 2008 / 5TH MAGHA 1929 OP.No. 28651 of 2001(J) ----------------------- PETITIONER: ------------ R. GOPINATHAN NAIR, "SREE RANJINI", SASTHAMKOVIL STREET, THYCAUD, TRIVANDRUM -14 BY ADV. SRI.T.M.CHANDRAN RESPONDENTS: ------------- 1. THE DEPUTY TAHSILDAR (RR), TRIVANDRUM. 2. SALES TAX OFFICER, OFFICE OF THE AGRICULTURAL INCOME TAX AND SALES TAX OFFICER, FIRST CIRCLE, VASANTHAM TOWERS, PERURKADA, TRIVANDRUM. BY GOVERNMENT PLEADER SRI. K.P. PRADEEP THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 25/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 ORDER ON CMP46651 OF 2001 IN OP 28651 OF 2001 DISMISSED 25.1.2008 SD/-C.N.RAMACHANDRAN NAIR, JUDGE. APPENDIX PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF THE DEMAND NOTICE DATED 18.6.1997 NO. 11112973/95-96 ISSUED BY THE SECOND RESPONDENT TO THE PETITIONER. EXT.P2 TRUE PHOTOCOPY OF THE DEMAND NOTICE DATED 18.6.1997 NO. 11112973/96-97 ISSUED BY THE SECOND RESPONDENT TO THE PETITIONER. EXT.P3 TRUE COPY OF THE NOTICE NO. S3/4015/2001 DATED 7.8.2001 ISSUED BY THE SECOND RESPONDENT TO THE PETITIONER. EXT.P4 TRUE COPY OF THE ORDER DATED 18.8.2000 PASSED BY THIS HON'BLE COURT IN CMP 40020 OF 2000 IN OP 23758 OF 2000 EXT.P5 TRUE VCOPY OF THE ORDER DATED 6.9.2000 PASSED BY THIS HON'BLE COURT IN CMP NO. 43319 OF 2000 IN OP NO. 23758 OF 2000 RESPONDENTS' EXHIBITS: NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- O.P. NO. 28651 OF 2001 -------------------------------------------- Dated this the 25th day of January, 2008 JUDGMENT Petitioner is challenging recovery proceedings on the ground that petitioner as director of the company, Vasanth Hotels Pvt. Ltd. is not liable to pay sales tax for the construction of flat completed by the company under the name Vasanth Apartments. However, Government Pleader submitted that petitioner has applied for registration of Vasanth Apartments. If petitioner has applied for registration then I see no reason why recovery could not be taken against the petitioner. This Court has held that even though Section 26C is introduced with effect from 1.4.1998, the arrears of tax due from private limited companies could be recovered from directors even for the period prior to introduction of Section 26C if on facts it is found that the private limited company is a closely held company where the directors are the only beneficiaries. It was declared so by this Court following the decisions of the Supreme Court in Meenakshi Mills' case and Mac 2 dowel's case. It is seen from the judgment in O.P.No. 23758 of 2000 disposed of by this Court on 17.11.2005 filed by the same petitioner that the respondents have reported that revenue recovery proceedings are withdrawn after regular assessment. However, the said judgment has no bearing for the issue raised in this case. Respondents 1 and 2 are therefore directed to verify the records and if petitioner was a director of the company and the company is a closely held company, then respondents 1 and 2 are free to proceed for recovery against petitioner and other directors. On the other hand, if the company is a widely held company and petitioner is one of the directors, and if there are beneficiaries outside the family, then no personal recovery should be made against the petitioner as director of the company. If any appeal is filed against assessment then recovery should be limited to the amount sustained in appeal. O.P. is disposed of as above. (C.N. RAMACHANDRAN NAIR) Judge kk 3