Recovery of tax : Dues from company cannot be recovered from its directors who are partner in firm.

The petitioner is a partnership firm originally constituted
in the year 1984 and it is running a cinema theatre under a duly granted licence.
The partnership firm was registered under the Indian Partnership Act, 1932. The
petitioner firm is also an assessee on the file of the respondent under the
Tamil Nadu Entertainment Tax Act, 1939.

M/s. Sri Mappillai Vinayagar Spinning Mills Ltd. and M/s. Sri
Manicka Vinayagar Spinning Mills Ltd. are limited companies incorporated under
the Indian Companies Act, 1913 and some of the partners in the petitioner firm
are directors of the said limited companies.

According to the petitioner, the petitioner is not having any
arrears of entertainment tax. A notice of attachment in Form No. 5 had been
issued by the respondent u/s.27 of the Revenue Recovery Act and by the said
notice the respondent had attached the petitioner’s property for the sales tax
arrears of other two private limited companies and another partnership firm.
Being aggrieved by that, the petitioner filed the above writ petition.

The Court observed that the properties of the petitioner, a
firm, were attached by the Commercial Tax officer for non-payment of sales tax
arrears under the Tamil Nadu General Sales Tax Act, 1959 of two other companies
and another firm on the ground that the partners of the petitioner firm were
also admittedly the directors of the two companies and partners of the assessee
firm.

The Court held that the company being a legal entity by
itself could sue and be sued as a legal entity and any dues from the company had
to be recovered only from that company and not from its directors. Therefore,
the proceedings for attachment of the properties of the petitioner firm on the
ground that the partners of the petitioner firm were also directors of the two
private limited companies, could not be sustained.

[Sri Mappillai Vinayakar Cine Complex v. Commercial Tax Officer,
(2008) 146 Comp. Cas 110 (Mad.)]