BIFR protection bars tax recovery against a sick industrial company without prior permission during pending inquiry and scheme stages.

When a sick industrial company's reference is registered and an inquiry is pending before the BIFR, section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 bars coercive recovery of assessed dues without the Board's prior permission. The protection was treated as continuing during the pendency of the inquiry and, where applicable, through stages connected with framing, preparation, sanction and implementation of a rehabilitation scheme, as well as appeal proceedings before the competent authority. Recovery of the assessed sales tax therefore could not proceed without prior approval, and the recovery direction was modified in favour of the company.

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Issues: Whether recovery of the assessed sales tax from a sick industrial company could proceed during pendency of the reference and inquiry before the Board for Industrial and Financial Reconstruction without prior permission of the Board.

Analysis: The petitioner was a registered dealer under the Haryana General Sales Tax Act, 1973 and had been declared a sick industrial company with a reference registered before the Board for Industrial and Financial Reconstruction. The Court noted that an inquiry was pending under section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 and that the statutory bar under section 22 operated against recovery proceedings. The protection was treated as continuing during pendency of the inquiry and, where applicable, during the stages connected with framing, preparation, sanction, implementation of a scheme, and appeal before the competent authority.

Conclusion: Recovery of the assessed amount could not be made without prior permission of the Board for Industrial and Financial Reconstruction. The direction was issued in favour of the petitioner-company and the impugned order was modified accordingly.

Ratio Decidendi: When a reference of a sick industrial company is registered and an inquiry is pending before the Board for Industrial and Financial Reconstruction, section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 bars coercive recovery of dues without the Board's prior permission.

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