Interim tax recovery restraint protected PDS sales while the statutory appeal was directed to be decided promptly.

Interim coercive recovery may be restrained in an exceptional tax matter where immediate enforcement would seriously prejudice public interest, and the assessee can satisfy any eventual liability later. The Court balanced the appellant public sector undertaking's obligation to continue PDS kerosene sales against its financial capacity, and protected it from coercive steps while directing the first appellate authority to decide the pending appeal within three months. The Court expressly declined to express any view on whether the transactions were PDS sales or on the merits of the tax dispute.

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Issues: Whether interim coercive recovery should be restrained pending disposal of the statutory appeal, and whether the appeal should be directed to be decided within a fixed time.

Analysis: The Court noted that it ordinarily does not interfere in interim tax matters, but found the case exceptional because the appellant was a public sector undertaking obliged to sell kerosene through the PDS route and immediate deposit of the substantial demand could adversely affect such sales. At the same time, the Court observed that the appellant was financially sound and could satisfy any eventual liability later. Balancing these considerations, the Court held that the interests of justice would be served by directing the first appellate authority to dispose of the pending appeal within three months and by protecting the appellant from coercive steps during that period. The Court also made it clear that it expressed no opinion on whether the transactions were PDS sales or on the merits of the tax dispute.

Conclusion: Interim coercive recovery was stayed, and the first appeal was directed to be decided expeditiously, in favour of the appellant.

Ratio Decidendi: In an exceptional tax matter, interim coercive recovery may be restrained where immediate enforcement would seriously prejudice public interest, provided the assessee's eventual liability can be secured and the appeal is directed to be heard promptly.

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