Rehabilitation scheme-based tax exemption claim must be decided by the competent State authority before any coercive recovery proceeds.

A rehabilitation scheme sanctioned under the Sick Industrial Companies (Special Provisions) Act, 1985 required the competent State authority to examine the petitioner's claim for extension of tax exemption in accordance with that scheme. The High Level Committee could not refuse the claim on lack of jurisdiction when the State Government was the admitted decision-maker. As no decision had yet been taken after sanction of the scheme, the matter had to be reconsidered administratively, and coercive recovery under the assessment orders was stayed until the State Government decided the claim.

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Issues: Whether the petitioner's claim for extension of tax exemption under the BIFR-sanctioned rehabilitation scheme was required to be considered by the State Government, and whether coercive steps under the impugned assessment orders could be taken pending such decision.

Analysis: The High Level Committee declined to decide the claim on the ground that it lacked jurisdiction, and it was undisputed that the competent decision-maker was the State Government. The sanctioned revival scheme, framed after compliance with the statutory procedure under the Sick Industrial Companies (Special Provisions) Act, 1985, directed extension of the exemption period for the petitioner's unit. In these circumstances, the claim had to be examined by the State Government in the light of the sanctioned scheme and the statutory framework governing sick industrial companies. Since no such decision had yet been taken after sanction of the scheme, the matter required administrative reconsideration rather than rejection by the High Level Committee.

Conclusion: The petitioner was entitled to a direction requiring the State Government to consider and decide its claim expeditiously in accordance with the sanctioned BIFR scheme and the Sick Industrial Companies (Special Provisions) Act, 1985, and coercive steps pursuant to the assessment orders were stayed until such decision was taken.

Final Conclusion: The writ petition was disposed of with directions for fresh consideration by the competent State authority and interim protection against recovery action pending that decision.

Ratio Decidendi: Where a rehabilitation scheme sanctioned under the Sick Industrial Companies (Special Provisions) Act, 1985 directs consideration of tax-related reliefs, the competent State authority must decide the claim in accordance with that scheme and coercive recovery should not proceed until such decision is taken.

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