Sale Tax Department cannot invoke Section 88(3) of the CGST Act, 2017 against an Ex-Director of the Corporate Debtor without filing claim before Liquidator – Smt. K.Malathi Vs. State Tax Officer and Ors. – Madras High Court
In this case, demand orders were passed based on the alleged irregularities that had taken place prior to the period of commencement of CIRP against M/s. SKMPL and served on Director of Corporate Debtor.
Hon’ble High Court held that:
(i) The right course available for the State Tax is to file appropriate claim before the Official Liquidator. In case there are no funds available with the company in liquidation, in which case, it is not possible to recover the sales tax dues from the Company in liquidation, in such circumstances, a new cause of action would arise to invoke Section 88(3) of the CGST Act and in which event, the Sale Tax Officer are at liberty to proceed against the Ex.Directors of the Company in liquidation in accordance with law.
(ii) The present action taken by the respondents in passing the impugned orders of demand in the name of M/s.SKMPL, which is in liquidation and serving on the petitioner, is not sustainable.
(iii) The Writ Petitions are allowed and the impugned orders are set aside.
