Protected sick industrial units cannot face sales tax recovery without Board permission or finalised rehabilitation scheme.

Recovery of sales tax dues against a sick industrial company is barred during the statutory protection period under the Sick Industrial Companies (Special Provisions) Act, 1985. Where a rehabilitation scheme is under preparation, coercive recovery cannot continue unless the Board grants permission under Section 22 or the scheme is finalised under Section 18, whichever occurs earlier. Departmental circulars directing that no recovery be made from a sick unit without such permission are binding on revenue authorities and must be followed consistently with the statutory scheme.

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Issues: Whether recovery proceedings for sales tax dues could be continued against a sick industrial unit in view of Sections 18 and 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 and the departmental circulars.

Analysis: The petitioner was an admitted sick industrial company within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. The departmental circulars stated that no recovery of sales tax dues would be made from a sick unit without the Board's permission under Section 22 of the Act, and such circulars were binding on the departmental authorities. Since a rehabilitation scheme was still under preparation under Section 18 of the Act, coercive recovery was not permissible until the statutory conditions for recovery were satisfied.

Conclusion: Recovery proceedings for the sales tax dues could not proceed against the petitioner until permission of the Board was obtained under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 or the rehabilitation scheme was finalised under Section 18 of that Act, whichever was earlier.

Final Conclusion: The challenge to recovery succeeded and the coercive recovery steps were stayed pending the statutory regime applicable to a sick industrial company.

Ratio Decidendi: Recovery of dues against a sick industrial company is barred during the protected period unless the Board grants permission or the rehabilitation scheme is finalised, and binding departmental circulars consistent with that statutory scheme must be obeyed by revenue .

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