- (1.) THE petitioners in all these writ petitions are the shareholders of the District Syndicate Bulandshahr, Limited, a limited company incorporated under the Indian Companies Act. Sales tax has been assessed on this company for the assessment years 1948 and 1949. After the assessment, the Collector of Bulandshahr, who was entrusted with realising the amount of tax assessed as arrears of land revenue, is taking proceedings against the assets of these petitioners. The petitioners raised objection before the Collector, the main ground of objection being that proceedings could not be taken against their personal assets but could be taken only against the assets of the company.
(2.) THE Collector ordered these objections to be filed without dismissing them or allowing them on the ground that the report from the Sales Tax Officer was that departmental instructions had been issued for rateable realization from each shareholder. It is obvious that the proceedings, which are being taken by the Collector, are not justified in law. A limited company, incorporated under the Indian Companies Act, is an entity separate and distinct from its shareholders. The shareholders, it has always been held, have no interest in the assets of the company and are not personally liable for the debts or liabilities of the company. It does not appear to be necessary to refer to cases in which this principle has been clearly laid down as it has been very well recognised. In these circumstances, since the sales tax has been assessed on the company and not on the shareholders, the Collector is entitled to proceed against the assets of the company only and any proceedings taken against the shareholders or their personal assets are void and against law.
(3.) CONSEQUENTLY , these petitions are allowed and it is hereby ordered that a writ of mandamus be issued to the Collector of Bulandshahr, restraining him from taking proceedings to realise the sales tax of the District Syndicate Bulandshahr, Limited, from the person or personal assets of these petitioners. This order is not to be interpreted as restraining the Collector from proceeding against any assets of the company which may be in the hands of any individual shareholder. The petitioner, in each case, will be entitled to his costs from the opposite party in the petition. Petition allowed.;