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Issues: (i) Whether the sanctioned rehabilitation scheme under SICA had ceased to operate and, consequently, the Revenue was entitled to recover its tax dues and proceed against the company's assets. (ii) Whether the company could still seek modification or extension of the scheme before the BIFR after it had been discharged from sickness and the scheme period had expired.
Issue (i): Whether the sanctioned rehabilitation scheme under SICA had ceased to operate and, consequently, the Revenue was entitled to recover its tax dues and proceed against the company's assets.
Analysis: The scheme had already run its course and expired on the stipulated date. The company had also ceased to be a sick industrial company when its net worth turned positive, and the later attempt to extend the scheme was rejected. Once the scheme was no longer in force, the statutory protection against recovery could not be relied upon to prevent the Revenue from recovering lawful dues. The Court also held that the High Court proceeded on an incorrect premise that the scheme was still operative and that the remedy lay only before the BIFR for lifting the bar.
Conclusion: The scheme had lapsed, and the Revenue was entitled to recover its dues, including by attachment and sale of the company's assets in accordance with law.
Issue (ii): Whether the company could still seek modification or extension of the scheme before the BIFR after it had been discharged from sickness and the scheme period had expired.
Analysis: The earlier observations in the appellate order did not confer a continuing right to seek modification at that stage. They only noted the company's breach and the possibility that modification would have had to be pursued through the prescribed statutory process when permissible. After discharge from SICA and expiry of the scheme, the Board lacked authority to entertain a fresh request for modification of the already concluded scheme. The pending application for modification was therefore not maintainable.
Conclusion: The company had no surviving right to seek modification or extension of the scheme before the BIFR.
Final Conclusion: The Revenue's challenge succeeded in substance, the High Court's view was set aside, and recovery of tax dues was permitted, while the question of interest and penalty was left to be clarified separately by the Board.
Ratio Decidendi: Once a sanctioned rehabilitation scheme under SICA has expired and the company has ceased to remain sick, the statutory protection against recovery no longer continues and the Board cannot entertain a fresh modification request for a concluded scheme.
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