State rehabilitation relief can bind tax recovery action, and cancellation of registration fails when the communication is ignored.

State Government relief issued for rehabilitation of a sick industrial company was held to bind the Commercial Tax Department, because section 32(10)(a) of the Madhya Pradesh Commercial Tax Act, 1994 permits additional time, instalments, or stay of recovery on genuine hardship and was treated as wider than section 22 of the Sick Industrial Companies Act. Relief could extend to dues arising after the Board for Industrial and Financial Reconstruction cut-off date. As the recovery and cancellation orders ignored the communication, they were unsustainable; the registration cancellation was quashed, the matter was remitted for reconsideration in line with the communication, and the petitioner was allowed to continue business pending fresh decision.

---

---

Issues: Whether the State Government's communication issued in aid of rehabilitation of a sick industrial company was binding on the Commercial Tax Department and whether the order cancelling the petitioner's registration and consequent restraint on business could be sustained.

Analysis: The communication was treated as one issued in the spirit of section 32(10)(a) of the Madhya Pradesh Commercial Tax Act, 1994, which empowers the State Government, where genuine hardship is shown, to grant additional time, instalments, or stay of recovery of tax dues. The provision was held to confer a wider discretion than section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 and to permit relief even in relation to dues arising after the cut-off date fixed by the Board for Industrial and Financial Reconstruction. Since the recovery and cancellation orders were passed without considering that communication, the departmental action was found unsustainable. The Court also held that if clarification was required, it ought to have been sought from the State Government.

Conclusion: The cancellation of the petitioner's registration could not stand and was quashed. The matter was directed to be reconsidered in accordance with the State Government's communication, while the attachment was allowed to continue and the petitioner was permitted to carry on business pending fresh decision.

---