SICA protection and pending waiver request barred coercive tax recovery until the competent authority decided the representation.

Recovery of sales tax dues covered by a sanctioned rehabilitation scheme under SICA could not proceed during the scheme's operation without BIFR consent, because Section 22 protected the sick company against recovery action for dues falling within the scheme period. The Court also held that a pending representation seeking waiver or deferment of tax dues under Section 38 of the U.P. Trade Tax Act had to be considered by the competent authority before coercive recovery could continue. In the circumstances, the recovery citations were quashed and the authority was directed to decide the representation before pursuing recovery.

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Issues: (i) Whether recovery of sales tax dues arising prior to the cut-off date of the sanctioned rehabilitation scheme could be proceeded with during the subsistence of the scheme without the consent of the BIFR. (ii) Whether the petitioner's request for waiver or deferment of tax dues under Section 38 of the U.P. Trade Tax Act could be ignored and coercive recovery continued while that representation remained pending.

Issue (i): Whether recovery of sales tax dues arising prior to the cut-off date of the sanctioned rehabilitation scheme could be proceeded with during the subsistence of the scheme without the consent of the BIFR.

Analysis: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 imposes a bar on proceedings for recovery against a sick company while an inquiry, scheme preparation, or sanctioned scheme is pending or under implementation, unless the consent of the Board or the appellate authority is obtained. The dues sought to be recovered related to the period covered by the rehabilitation scheme, and the record showed that the impugned recovery steps were taken during the operation of the SICA regime without BIFR consent. The existence of the scheme and its protective effect therefore continued to operate against recovery action of this kind.

Conclusion: Recovery of the disputed tax dues could not be lawfully proceeded with in the absence of BIFR consent and was impermissible at that stage.

Issue (ii): Whether the petitioner's request for waiver or deferment of tax dues under Section 38 of the U.P. Trade Tax Act could be ignored and coercive recovery continued while that representation remained pending.

Analysis: The amended scheme and the subsequent BIFR order were treated as preserving the unimplemented benefits of the rehabilitation package for the unexpired period of the scheme. The Court found that the petitioner's representation seeking consideration of waiver or deferment had not been finally rejected and remained to be decided by the competent authority. In that situation, continuation of coercive recovery would defeat the subsisting claim for consideration under the scheme and the statutory route invoked by the petitioner.

Conclusion: The pending representation had to be considered and decided in accordance with law, and coercive recovery was not permissible until such decision.

Final Conclusion: The recovery citations were quashed and the competent authority was directed to decide the petitioner's representation before any coercive recovery of the disputed amount could be pursued.

Ratio Decidendi: Where a sick company is protected by a sanctioned rehabilitation scheme under SICA, recovery of covered dues cannot proceed without the Board's consent, and pending consideration of a statutory representation for waiver or deferment bars coercive recovery until the competent authority decides it.

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