MADRAS HIGH COURT: RECOVERY ACTION AGAINST COMPANY DIRECTORS CANNOT BE INITIATED IF STATUS OF ASSESSEE IS NON-EXISTENCE

The Madras High Court in the case Lakshana Cotton Spinning Mills Limited v. The Commercial Tax Officer observed and has ruled that the recovery action which is initiated against the directors of a company cannot be initiated if the status of the assessee is non-existent.

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The Division bench comprising of Justice Anita Sumanth and Justice G. Arul Murugan was hearing the present matter.

The bench in the case observed that, while in the case of amalgamation, it is only the apparent and outer shell of the company which is destroyed. However, in the case of dissolution, the entity wholly ceases to exist.

In the present case, the assessee company was ordered to be wound up, and an Official Liquidator was appointed to manage the company's liquidation.