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Recovery from directors

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(Querist)
17 February 2009 Can a sales tax demand be recovered from directors of a ltd company ? If yes then what are the remedies. If no, what are the case laws.further the demand is due to non submission of statutory forms, and directors have no role, please provide case laws to support your reply.
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
17 February 2009 First you have to verify what for the demand has been raised.

Whether it is for the rate structure, or suppression of sales or any mistakes by clerks or stock problem.

If the mistakes have happened during the course of business with no fault of the directors then you cannot recover from them.

If the mistakes has been happened due the fault of the directors, then it can be recovered from the directors.

Based on your facts of the demand you have choose the option.
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
17 February 2009 Yes.
Provided it is proven by the department that it was intention of director to circumvent the taxes or defraud the department
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