Security for stay of recovery may include bank guarantee where the appellate authority has prescribed discretion under the tax rules.

Under the Mysore Sales Tax Act, the appellate authority could exercise discretion to stay recovery only on sufficient security furnished in the prescribed form, and the prescribed rule authorised personal security, property security, or a bank guarantee. Because Rule 30-B had come into force before the stay request was considered, the Deputy Commissioner was competent to insist on a bank guarantee even though it was not in force when the returns were filed. The rule was treated as regulating the manner of security and not as impairing the right of appeal, so the security condition was valid against the assessee.

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Issues: Whether the Deputy Commissioner could insist on a bank guarantee as security for stay of recovery in the appeal proceedings under the Mysore Sales Tax Act.

Analysis: Section 20(5) empowered the appellate authority, in its discretion, to direct payment before disposal of the appeal if the appellant furnished sufficient security in such form and manner as prescribed. Rule 30-B, which had come into force before the appeal and stay application were filed, authorised the Deputy Commissioner to require personal security, property security, or a bank guarantee. The earlier absence of the rule when the returns were filed did not matter, because the relevant power was exercised after the rule became operative. The rule did not impair the right of appeal, and the authority retained discretion to choose the form of security.

Conclusion: The requirement of a bank guarantee was within the Deputy Commissioner's competence and was valid against the assessee.

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