Stay recovery pending appeal must be reasoned on prima facie case, convenience and loss, without judging appeal merits.

Power to stay recovery pending appeal under the Rajasthan Sales Tax Act is quasi-judicial and requires a hearing and recorded reasons if stay is refused or partly refused. Those reasons must address only the stay criteria, namely prima facie case, balance of convenience and irreparable loss, and must not prejudice the appellate forum by entering the merits of the appeal. On the facts, the order was found to consider the assessment order, appeal grounds and relevant materials, so it was not a non-speaking or mechanical order. The assessee was nevertheless entitled to a fresh opportunity, and any reconsidered stay decision had to be reasoned strictly within the stay parameters.

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Issues: Whether the order on the stay application under the Rajasthan Sales Tax Act, 1954 was vitiated for want of reasons and application of mind, and what principles govern exercise of the power to stay recovery pending appeal.

Analysis: The power to stay recovery under the first proviso to section 11(3) is quasi-judicial in character because the statute requires a reasonable opportunity of hearing before rejection and also mandates recording of reasons for such rejection. The reasons to be recorded are confined to the stay parameters, namely prima facie case, balance of convenience and irreparable loss, and not to adjudication on the merits of the pending appeal. The authority is not expected to make observations that may prejudice the appellate authority, but it must show application of mind to the relevant materials while deciding whether to grant, refuse, or partly grant stay. On the facts, the order disclosed consideration of the assessment order, grounds of appeal and relevant facts, and therefore could not be treated as a non-speaking or mechanical order. The Court also directed that the assessee be given an opportunity before the authority, and that any rejection or partial rejection of stay must be supported by reasons confined to the stay criteria.

Conclusion: The stay order was not held to be application of mind or illegal on that ground, but the matter was directed to be reconsidered with a hearing and with reasons limited to the stay parameters, without commenting on the merits of the appeal.

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