State tax recovery machinery is not barred by sick company protection where no irreconcilable conflict exists.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar garnishee recovery proceedings under section 13-A(1) of the Orissa Sales Tax Act, 1947, because the State recovery mechanism is an ancillary part of the taxing power under entry 54 of List II. The court held that the two enactments operate in separate fields and that there was no irreconcilable conflict attracting constitutional supremacy or displacement of the State machinery provision. The sales tax recovery notices were therefore upheld and the challenge failed.

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Issues: Whether section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 overrides section 13-A(1) of the Orissa Sales Tax Act, 1947 so as to bar garnishee recovery proceedings for sales tax dues against a sick industrial company.

Analysis: The recovery notice issued under section 13-A(1) was treated as a proceeding in the nature of execution against the property of the industrial company. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 applies where a sick industrial company is under inquiry or a rehabilitation scheme is under preparation, and its protective language extends to execution, distress or the like. However, the taxing power of the State under entry 54 of List II includes the power to make ancillary machinery provisions for recovery of tax. The State recovery mechanism and the Central Act were held to operate in separate and distinct fields. There was no irreconcilable conflict attracting federal supremacy under article 246 of the Constitution, and the doctrine of pith and substance supported the validity of the State recovery provision.

Conclusion: Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not override section 13-A(1) of the Orissa Sales Tax Act, 1947, and the garnishee recovery proceedings are not barred.

Final Conclusion: The challenge to the sales tax recovery notices failed, and the petitions were dismissed.

Ratio Decidendi: A State law providing machinery for recovery of sales tax, being ancillary to the State's taxing power, is not displaced by section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 unless there is an irreconcilable conflict between the two enactments.

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