Interim stay against coercive recovery may issue where a disputed interest demand raises a prima facie case and auction would cause irreversible prejudice.

Interim stay may be granted where an assessee's appeal raises a prima facie challenge to a disputed interest demand and coercive recovery would cause irreversible prejudice. Here, the authorities were proceeding to auction seized goods and appropriate the sale proceeds towards the disputed liability, even though the duty period predated the interest provision relied on. On that footing, the pending appeal disclosed a sufficient prima facie case for protection, and the auction and impugned order were stayed pending disposal of the appeal. The operative principle is that coercive recovery should be restrained when it may render the appeal nugatory before the legality of the demand is examined.

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Issues: Whether the impugned order and the proposed auction of seized goods should be stayed pending disposal of the appeal on a prima facie case.

Analysis: The demand of interest was disputed on the footing that the duty liability related to a period prior to the introduction of the interest provision, and the authorities were proceeding with coercive recovery by auctioning the seized goods and appropriating the sale proceeds. In these circumstances, the pending appeal disclosed a prima facie case for interim protection, and refusal of stay would have enabled irreversible recovery measures against the disputed interest demand.

Conclusion: Interim stay of the impugned order and the auction proceedings was warranted, and the request was allowed in favour of the assessee.

Ratio Decidendi: Where coercive recovery would cause irreversible prejudice and the challenge discloses a prima facie case on the maintainability of the demand, interim stay may be granted pending appeal.

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