JUDGMENT By the Court.—By means of the present writ petition the petitioner is challenging the order dated 20.2.2002, passed by the Assistant Commissioner of Income Tax, Saharanpur, under Section 179 of the Income Tax Act (called the ‘Act’ for short) by which the petitioner has been held liable to pay income tax dues of the company, M/s. P.S. Paper & Board Mills (P) Ltd., Saharanpur, for the assessment year 1990-91 being the Director of the said company. 2. Heard learned counsel for the petitioner and Sri Ashok Kumar, learned Standing Counsel. 3. Learned counsel for the petitioner submitted that the company has substantial assets and dues can be recovered from such assets, but without recording any finding that the amount cannot be recovered from the assets of the company the order under Section 179 of the Act has been passed. He further submitted that the respondent can only proceed to pass such order under Section 179 of the Act when the respondent fails to recover the amount from the assets of the company and to make out a case that the recovery is attributed to the gross neglect, misfeasance or breach of duty on the part of the petitioner in relation to the affairs of the company. In the impugned order neither any finding has been recorded that the amount cannot be recovered from the assets of the company nor any finding has been recorded that the recovery is attributed to any gross neglect, misfeasance or breach of duty on the part of the petitioner in relation to the affairs of the company and, therefore, the order is liable to be set aside. In support of the contention he relied upon the Division Bench decision of the Gujarat High Court in the case of Amit Suresh Bhatnagar v. Income Tax Officer, (2009) 221 CTR (Guj) 70 and another decision of the Gujarat High Court in the case of Bhagwandas J. Patel v. Deputy Commissioner of Income-Tax, 138 ITR 127. 4. In support of the contention he relied upon the Division Bench decision of the Gujarat High Court in the case of Amit Suresh Bhatnagar v. Income Tax Officer, (2009) 221 CTR (Guj) 70 and another decision of the Gujarat High Court in the case of Bhagwandas J. Patel v. Deputy Commissioner of Income-Tax, 138 ITR 127. 4. Sri Ashok Kumar, learned Standing Counsel, submitted that in the counter affidavit, filed by respondent No. 1, it is stated in paras 5 and 6 that the respondent has tried to recover the amount but the same could not be recovered because the assets of the company has been attached by the State Bank of India, Saharanpur, and the suit against the company claiming recovery of the outstanding dues is pending and, therefore, the Assistant Commissioner has rightly proceeded to pass the order under Section 179 of the Act. 5. Section 179 of the Act reads as follows : “179(1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. (2) Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-Section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962.” 6. We have considered the rival submissions and perused the impugned order. The primary duty to pay the outstanding dues is on the company. The company is a separate legal entity and is an artificial juristic person. We have considered the rival submissions and perused the impugned order. The primary duty to pay the outstanding dues is on the company. The company is a separate legal entity and is an artificial juristic person. In normal course the dues of the company cannot be recovered from the Director of the company. In the case of M/s. Meekin Transmission Ltd. v. State of U.P. and others, 2008 NTN (36) 107 a Division Bench of this Court has held that when the tax dues are to be recovered from a corporate body, the Directors of such corporate body would not automatically be responsible unless the doctrine of lifting of veil is found to be applicable in the facts and circumstances of the affairs of that company and thereafter it is further found as to who are the persons who were operating behind the veil; otherwise a Director or shareholder cannot be made personally responsible for the dues of a company except of those cases where such a provision is made in the statute or otherwise warranted in law. 7. In view of above the dues of the company can be recovered from the Director of the company only under the special provision of the Act, if it provides so. Therefore, such special provision should be construed strictly. We are of the view that before coming to the conclusion that the petitioner is liable for the outstanding dues of the company, being the Director of the company under Section 179 of the Act, it is obligatory to record a finding that the outstanding dues cannot be recovered from the assets of the company. A further finding is also necessary to be recorded that the petitioner fails to establish that the recovery is not attributable to the gross neglect, misfeasance or breach of duty on the part of the petitioner in relation to the affairs of the company. A perusal of the order reveals that no such findings have been recorded and, therefore, the order is not sustainable and liable to be set aside. 8. In the case of Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. and others, (2000) 5 SCC 694 the Apex Court held that the State shall have a preferential right to recover its dues over the rights of the bank. 8. In the case of Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. and others, (2000) 5 SCC 694 the Apex Court held that the State shall have a preferential right to recover its dues over the rights of the bank. In the case of Union of India and others v. SICOM Limited and another, (2009) 2 SCC 121 the Apex Court has held that the rights of the Crown to recover the debt would prevail over the right of a subject. In the case of Central Bank of India v. State of Kerala, 2009 VST 41 the Apex Court held that the first charge is of State to recover sales tax dues over bank dues. 9. Therefore, even if the property has been attached by the State Bank of India for the recovery of their dues, the Income Tax Department can proceed to recover the outstanding dues from the assets of the company. 10. In the result the writ petition is allowed and the order dated 20.2.2002 (Annexure ‘3’ to the writ petition) is quashed. However, it will be open to the respondent to proceed afresh under Section 179 of the Act in case if the respondent arrives at a conclusion that the amount cannot be recovered from the assets of the company and the petitioner fails to proof that recovery is not attributable to gross neglect, misfeasance of breach of duty on the part of the petitioner in relation to the affairs of the company. ————