( 1 ). Petitioner Paramjit Singh, the petitioner approached this Court on 10. 9. 1996 seeking direction for quashing order (Annexure-8) passed by respondent No. 10 on 24. 7. 1996 and prayed that an order of restraint be passed that the respondents are not entitled to recover the amount of Rs. 1,11,75,301. 00 from the him. ( 2 ). It was alleged that Anand Laminates Pvt. Ltd. , a limited company was incorporated on 12th October, 1984 under the provisions of Indian Companies Act, 1956 with its registered office at village Sesai, Tehsil Kalaras, A. B. Road, Shivpuri, Madhya Pradesh. The petitioner was one of the directors of respondent No. 3 company at the time of its incorporation. On 16. 6. 1986 he tendered resignation expressing his desire to retire from the directorship of the company. The resignation was duly accepted by the Board of Directors through its resolution (Annexure-P. 1) dated 16. 6. 1986. On 4. 7. 1986 an intimation (annexure- P. 4) to that effect was duly sent to the Registrar of Companies vide postal receipt (Annexure-P. 5 ). Respondent No. 3 had on 9. 5. 1989 also made an application (Annexure-P. 6) to the Directorate of Industries, Madhya Pradesh, in which the petitioner s name was not included as one of the Directors. On 15. 7. 1996, respondent No. 2, through letter (Annexure-P. 8) informed respondent No. 1 that amount was recoverable from the Company towards as arrears of sales tax and requested that the same be recovered from the petitioner as arrears of Land Revenue. As the petitioner was residing within the jurisdiction of respondent No. 1, therefore, on the basis of this letter, respondent No. 1 on 24. 7. 1996 passed an order for effecting recovery from the petitioner as arrears of Land Revenue. Aggrieved by this action, the petitioner on 3. 8. 1996 submitted representation (annexure-P. 11) before respondent No. 1 stating that he is not the Director of respondent No. 3 company, therefore, he is not liable to pay any tax liability of respondent No. 3 company. The petitioner s prayer for staying the recovery against him was rejected by respondent No. 1 on 23. 8. 1996 by order (annexure-P. 12), therefore, the petitioner approached this Court for the directions aforementioned. ( 3 ). After show cause notice, the respondents filed their replies. On 13. 8. 1998 after the parties were heard. The petitioner s prayer for staying the recovery against him was rejected by respondent No. 1 on 23. 8. 1996 by order (annexure-P. 12), therefore, the petitioner approached this Court for the directions aforementioned. ( 3 ). After show cause notice, the respondents filed their replies. On 13. 8. 1998 after the parties were heard. Contention on behalf of the petitioner was noticed that though the recovery had been initiated by Sales Tax Officer in Madhya Pradesh on account of sales tax against respondent No. 3 company, which is a private limited company but the Assistant Collector Grade-II, New Delhi was proceeding ahead to make recovery against the petitioner personally, which was without jurisdiction. Recovery certificate received from the State of Madhya Pradesh by respondent No. 1 was not available on record. It was also noticed that in a writ petition filed by respondent No. 3, Madhya Pradesh High Court had quashed the impugned demand. Accordingly, the Court directed respondent No. 2 to make a clear statement on affidavit on the following two points:- 1. Whether the recovery is against the private limited company (respondent No. 3) or the petitioner personally or both, as the case may be. A copy of the recovery certificate sent to the respondent No. 1 shall also be filed. 2. Whether the recovery which is referable to the period 1. 1. 89 to 30. 9. 82 has been quashed and set aside by the judgment of High Court dated 18. 11. 96 in CWP 885/94 and if so, then how the recovery proceedings are being kept alive? ( 4 ). Pursuant to the aforementioned direction, respondent No. 2 filed an additional affidavit of Shri R. K. Gupta, Commercial Tax Officer, Shivpuri, Madhya Pradesh stating that respondent No. 3 is a private limited company, which was constituted on 12. 10. 1984 in Madhya Pradesh. As per the record available with the Department, Shri Manjinder Singh Anand and Shri Paramjit Singh Anand were the two directors of the company. A sum of Rs. 1,52,55,227. 00 was recoverable from the company for the period from 30. 1. 1989 to 20. 9. 1993 under three heads, namely, Sales Tax (Local); Central Sales Tax and Extra Tax. As per the record available with the Department, Shri Manjinder Singh Anand and Shri Paramjit Singh Anand were the two directors of the company. A sum of Rs. 1,52,55,227. 00 was recoverable from the company for the period from 30. 1. 1989 to 20. 9. 1993 under three heads, namely, Sales Tax (Local); Central Sales Tax and Extra Tax. In so far as the recovery of Sales Tax and Central Sales Tax is concerned, the same was quashed by an order passed by learned Single Judge of Madhya Pradesh High Court, Gwalior Bench in Civil Writ Petition No. 885/94, titled as Anand Laminates Ltd. and another v. Government of Madhya Pradesh and others, decided on 18. 11. 1996. An appeal at the behest of State of Madhya Pradesh was pending before a Division Bench of the said High Court against the said decision. As such presently the amount recoverable from respondent No. 3 company is to the tune of Rs. 4,11,800. 00 also by way of Entry Tax for the period from 30. 1. 1989 to 20. 9. 1993. Additional affidavit further states that respondent No. 3 company was registered in Madhya Pradesh as a dealer under the provisions of Madhya Pradesh Sales Tax Act. Tax Officer, Shiv Puri was never intimated by respondent No. 3 or by the petitioner in the prescribed manner within 30 days of the occurrence of the event, namely, the alleged change of the directorship of the company. According to respondent No. 2, the petitioner was claiming that he had submitted resignation on 16. 6. 1986, which was accepted by the Board of Directors but effect was given to the said intimation only on 1. 10. 1996. As the name of the petitioner is still available on the record of respondent No. 2 as a share holder of respondent No. 3, and the same was not got removed, by applying under sub-Clause (8) of Section 22 of the Madhya Pradesh Vanijyik Kar Adhini Year 1994 and, therefore, the petitioner being one of the Directors of respondent No. 3 company, was liable towards the tax liability of respondent No. 3. ( 5 ). We have heard learned counsel for the parties and been taken through the record. The record do suggest that on 16. 6. 1986 the petitioner tendered his resignation from the directorship of respondent No. 3 company. ( 5 ). We have heard learned counsel for the parties and been taken through the record. The record do suggest that on 16. 6. 1986 the petitioner tendered his resignation from the directorship of respondent No. 3 company. The same was also accepted by the Board of Directors. On 8. 9. 1986 Central Bank of India had also given effect to the removal of the petitioner s name as Director of respondent No. 3 Company. Due intimation in Form No. 32 under the Companies Act, 1956 was given to the Registrar of Companies on 2. 9. 1986. On 15. 9. 1986 a fee of Rs. 60. 00 was also deposited vide receipt No. 346215. It appears that on deposit of additional amount, which was deposited only on 1. 10. 1996 that the Registrar of Companies gave effect to the changes in the directorship by ordering deletion of the petitioner s name with effect from 16. 6. 1986. There is no rebuttal on behalf of the respondents to this evidence, which has been produced on record by the petitioner as Annexures-P. 13 and P. 14 along with additional affidavit dated 3. 10. 1996, which was filed pursuant to a specific direction issued in that behalf by ordr dated 12. 9. 1996. In the Annual Return of respondent No. 3 Company, submitted to the Registrar of Companies, made up to 30. 12. 1987, the date of cessation of the petitioner as Director of the Company is shown as 16. 6. 1986. ( 6 ). Dealer under Section 2 (d) of the Madhya Pradesh General Sales Tax Act, 1958 (for short "the Act") has been defined to mean:- "any person who carries on the business of buying, selling, supplying or distributing goods directly or otherwise whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration and includes:- [ (i)a local authority, a company, an undivided Hindu Family or any society (including a co-operative society), club, firm or association, which carries on such business]. XXXXXXXXXXXX"company incorporated under the Companies Act is included in the definition of a Dealer. Tax under the provisions of the Act can be levied only on a dealer and the liability to pay tax is also that of a dealer under the Act. It is not disputed that the impugned demand has also been raised against the Company and not against the Directors individually. Tax under the provisions of the Act can be levied only on a dealer and the liability to pay tax is also that of a dealer under the Act. It is not disputed that the impugned demand has also been raised against the Company and not against the Directors individually. There cannot be any dispute with the proposition that a company registered under the Companies Act, 1956 is a legal entity distinct from its shareholders and speaking generally the corporate veil cannot be lifted unless the legislature so provides. However, in certain exceptional cases the Court is entitled to lift the veil of the corporate entity and topay regard to the economic realities behind the legal facade. These exceptional cases embrace those cases where the corporate entity is used for tax evasion or to circumvent tax avoidance or to perpetrate fraud. This principle in law is well established and has been recognised in The Commissioner of Income-tax, Madras v. Sri Meenakshi Mills Ltd. etc. , AIR 1967 S. C. 819 and Juggilal Kamlapat v. Commissioner of Income-tax, U. P. AIR 1969 S. C. 932. It has also been applieed by a Division Bench of Madhya Pradesh High Court in Tracways P. Ltd. v. Commissioner of Sales Tax 47 (1981) Sales Tax Cases 407 and by a Division Bench of this Court in Santanu Ray v. Union of India, 65 (1989) Co. Cases 196. Nothing is shown or brought on record by the respondents that the Adjudicating Authority in this case has fastened any liability on the petitioner as a former director of the petitioner company. Demand has been raised only against the company and not against the directors. Only because the petitioner s name did appear in the records of respondent No. 2 as one of the directors on the company being incorporated in 1984, only on that basis the intimation was sent by respondent No. 2 to respondent No. 1 stating that as the petitioner is one of the directors of the Company, therefore, the amount could be recovered from him. In view of the ratio of the aforementioned decisions to enable this Court to lift the corporate veil, it was for the Adjudicating Authority first to have fastened liability on the petitioner by affording opportunity of being heard, which was not done. In view of the ratio of the aforementioned decisions to enable this Court to lift the corporate veil, it was for the Adjudicating Authority first to have fastened liability on the petitioner by affording opportunity of being heard, which was not done. Presently before us the question is that can the tax liability of respondent No. 3 be enforced against the petitioner. We may refer to a decision of Division Bench of Punjab High Court in Surinder Nath Khosla v. Excise and Taxation Commissioner, Punjab and another, Civil Writ No. 2285/1963, decided on 22. 4. 1964 and reported as (1995) 4 Comp. L. J. 343 (Punjab) that where tax has been assessed on the company, proceedings for its recovery can only be taken against the assets of the company. Any proceedings taken against the shareholders from their personal assets are void and against law. On 13. 8. 1998 the first question on which additional affidavit was directed to be filed was specific calling upon respondent No. 2 to state that whether the recovery is against the private limited company or the petitioner personally or both. In view of the answer, which has been given in the additional affidavit that the levy of the tax is only against the company and it being not stated that any adjudication has been made against the petitioner in its individual capacity, there can be no manner of doubt that it cannot be enforced against the petitioner. In any case the petitioner had ceased to be a Director of the Company much pror to the period for which the tax liability of the Company is due. In the circumstances aforementioned, the proceedings for recovery against the petitioner being bad in law are liable to be quashed and set aside. The writ petition is allowed. The impugned orders are quashed and set aside. No costs.