• Directors liability after resignation

I am an Indian citizen staying in India.

I was Additional Director of a India registered company for 13 months and then I resigned in June 2014 , updated on MCA as well. State tax dept has sent our Colony panchayat the demand letter to put the "boja" on the share certificate. I have personally not received even a single letter from the state tax dept on my residential address 

The current status of the company on MCA portal shows "Strike-off". The demand letter from state tax dept has come almost 6.5 years after I resigned. 

Am I personally liable for tax dues now ?
Asked 4 years ago in Business Law

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22 Answers

No perosnal liability of director and dues arise after your resignation, director cannot be hold liable.

Yogendra Singh Rajawat
Advocate, Jaipur
22993 Answers
31 Consultations

if the dues are for the period while you were a director, you are legally bound to face the complications,

Suneel Moudgil
Advocate, Panipat
2382 Answers
6 Consultations

You are not liable for tax dues after you have resigned from company and your resignation has been accepted and uploaded on website 

Ajay Sethi
Advocate, Mumbai
96994 Answers
7833 Consultations

The director is not personally liable for the dues after the regination is duly accepted and updated on ROC. You can challenge such letter or notice to put 'bhoja' on your property. 

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

No you are not. IT department can initiate an assessment for a previous year not more that 6 years from the current period. 

Rahul Mishra
Advocate, Lucknow
14107 Answers
65 Consultations

Company is liable for sales tax dues 

you are not personally liable 

Ajay Sethi
Advocate, Mumbai
96994 Answers
7833 Consultations

The Directors even after resignation can be held liable for tax evasion for the period when he was officiating the Directorship. 

Therefore even after 6.5 years your liability has not gone. 

Check with your CA the actual scenario and take defence accordingly. 

Devajyoti Barman
Advocate, Kolkata
23235 Answers
514 Consultations

First of all you must see the notice intimating the liability for the taxes levied on you.

If it is levied beyond three years, then it may be barred by limitation.

Therefore you first obtain a copy of the notice intimating the taxes to be paid by you, refer the same before an advocate in the local and obtain a proper opinion on all further course of action to be taken by you in that regard.

 

T Kalaiselvan
Advocate, Vellore
87196 Answers
2342 Consultations

The directors are not personally liable to stakeholders if they act within the scope of powers vested in them. The general rule in this regard in that wherever an agent is liable, those directors would be liable, but where the liability would attach to the principal only, the liability is the liability of the company. The Director shall also be liable in case of negligence & fraud by the Company, knowingly making any mis-statement or sharing false-information with the stakeholder, Failure to repay deposits on time, payment of dividend out of capital and entering into contract with related parties.

Directors have powers subject to Companies Act, Memorandum and Articles of association. Whenever they exceed these limits they are personally liable for the act being ultra vires. 

Negligence may give rise to liability; there need not be fraud. But they will not be liable where they have acted bonafide and for the benefit of the company

 Directors are the trustees for the money and property of the company. They hold an office of trust and if they misuse their powers they will be liable for breach of trust and may be required indemnify the losses incurred to Company. 

Directors are liable to the company for misfeasance. The word misfeasance covers willful negligence.

If the company is in the course of winding up, the court may, on the application of the liquidator, creditor or contributory examine the conduct of a director for any misfeasance or breach of trust in relation to the company.

 

T Kalaiselvan
Advocate, Vellore
87196 Answers
2342 Consultations

- As per law, all the directors , whether resigned or exists are liable for any debt of the company, if the said debt was due at the time of outgoing director.

- However, Tax liability of a company not come under the burden of a director , and it is charged from the company.

- Since, you have resigned in June 2014, and the said demand letter from state tax dept come after your resignation , then legally you are not liable for the said payment or liability.  

Mohammed Shahzad
Advocate, Delhi
14537 Answers
222 Consultations

Than also, penalty agaisnt tax liability impose on company and director who is personally committed the act and not all directors.

 

Yogendra Singh Rajawat
Advocate, Jaipur
22993 Answers
31 Consultations

For which year state tax department has sent you letter whether your were in service for that period or later on and how come after 6.5 years than can sent the letter to you. Maximum three years transactions can be valid. You can cross questions to state tax department for unnecessary harrassment. Because mean time CA must has provided audit report. In this what your CA suggest.

Ganesh Kadam
Advocate, Pune
12987 Answers
262 Consultations

Yes if the dues are during your tenure you may be made party but you can show that it was not your fault or area 

Prashant Nayak
Advocate, Mumbai
32496 Answers
201 Consultations

If the dues are prior to your resignation then you would be liable with other persons who were in management and control of the company at the material time 

If dues pertain to period after your resignation then you would not be liable

Yusuf Rampurawala
Advocate, Mumbai
7695 Answers
79 Consultations

1.If the said tax pertains to the period after your resignation, then you are not liable to pay the said tax.

 

2. Act on receipt of the notice only.

Krishna Kishore Ganguly
Advocate, Kolkata
27461 Answers
726 Consultations

You are not personally but officially liable for payment of the tax during your period as Additional Director.

Krishna Kishore Ganguly
Advocate, Kolkata
27461 Answers
726 Consultations

Yes you are liable if the tax dues are for the period before your resignation 

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

Director cannot be held liable for liabilities incurred by the company after the date of acceptance of resignation

Mohammed Mujeeb
Advocate, Hyderabad
19306 Answers
32 Consultations

You are not personally liable. 

Mohammed Mujeeb
Advocate, Hyderabad
19306 Answers
32 Consultations

See directors are not personally liable for debt of company until unless the director is guarantor or their were fraudulent transactions.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

1. Company is a legal entity separate and distinct from its director.

2. You are in no manner liable to pay the taxes for the period subsequent to your resignation, after acceptance of your resignation.

Ashish Davessar
Advocate, Jaipur
30776 Answers
972 Consultations

You will be liable for tax liabilities during your tenure as director of company and not for liabilities arising after your resignation.

Mohit Kapoor
Advocate, Rohtak
10687 Answers
7 Consultations

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