Conditional stay in tax appeal modified after prima facie merits and balance of convenience were reassessed for interim relief.

In a writ challenge to a conditional stay order in pending tax appeal proceedings, the Court treated prima facie case, balance of convenience, and likely injury as the proper tests for interim protection. It held that examining the apparent merits of the assessment for that limited purpose did not amount to deciding the appeal on merits, but was necessary to see whether the authority had applied its mind. Noting the steep reassessment demand, earlier payment already made, and surrounding circumstances, the Court modified the stay condition and directed a reduced further deposit, with the balance demand stayed pending disposal of the first appeal.

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Issues: Whether, in a writ challenge to a conditional stay order passed in pending tax appeal proceedings, the Court could examine the prima facie merits of the assessment and whether the condition imposed for stay required modification.

Analysis: While the assessment itself was under appeal, the legality of the stay order could still be tested on the grounds ordinarily governing interim protection, namely the existence of a prima facie case, balance of convenience, and likely loss or injury to the parties. The Court held that consideration of these factors did not amount to deciding the appeal on merits, but was necessary to see whether the authority had applied its mind or had acted mechanically. Taking note of the steep increase in demand on reassessment, the amount already deposited earlier, and the surrounding circumstances, the Court found that the original condition required interference.

Conclusion: The conditional stay order was modified, and the assessee was directed to deposit a reduced further amount, upon which the remaining demand would stay pending disposal of the first appeal.

Ratio Decidendi: In deciding a conditional stay request in a pending tax appeal, the relevant authority or court must apply the prima facie case and balance of convenience tests, and may examine the apparent merits of the assessment only to the limited extent necessary for interim relief.

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