Interim relief in turnover-tax dispute modified where balance of convenience favoured safeguarding public revenue pending writ adjudication.

Interim protection against turnover-tax assessment was modified because the Court found that, in revenue matters, a prima facie case alone could not outweigh the balance of convenience in favour of safeguarding public fiscal interests. The Court declined to decide the substantive validity of the turnover-tax challenge at the interlocutory stage, but accepted that the Revenue required protection pending final adjudication. It therefore directed partial cash deposit and security by bank guarantee, while leaving the writ petitioners' substantive rights and challenge to be decided in the pending writ proceedings.

---

---

Issues: Whether the interim order restraining assessment and collection of turnover tax required modification on the ground of balance of convenience, and whether the Revenue should be protected by a cash deposit and bank guarantee pending disposal of the writ petition.

Analysis: The matter arose in the context of a challenge to the levy of turnover tax under the West Bengal taxation laws and the State's request for modification of an interim order granted in the writ proceedings. The Court treated the question as interlocutory and declined to finally determine the competing contentions on the validity and scope of the turnover-tax provisions. It held that a prima facie case existed for the writ petitioners, but emphasised that the decisive factor was the balance of convenience, especially where public revenue was involved. Relying on the Supreme Court's approach in matters of revenue collection and interim protection, the Court reasoned that public fiscal interests should not be placed in jeopardy by an injunction that would, in effect, grant substantial final relief at the interim stage. It further accepted that a security arrangement of cash deposit and bank guarantee was appropriate protection for the Revenue.

Conclusion: The interim order was modified in favour of the Revenue by requiring deposit of 50% of the turnover tax in cash and security for the remaining 50% by bank guarantee, and the writ petitioners were required to file returns accordingly without prejudice to their rights.

Final Conclusion: The appeal succeeded only to the limited extent of altering the interim protection, while preserving the substantive challenge for adjudication in the pending writ proceedings.

Ratio Decidendi: In disputes involving public revenue, interim relief should not be granted merely on the strength of a prima facie case where the balance of convenience lies with the State, and the Court may require partial cash payment and security to safeguard fiscal interests pending final decision.

---