Pending stay application bars coercive recovery by bank guarantee encashment until appellate authority decides it.

Where a statutory stay application is pending before the appellate authority, coercive recovery by encashment of a bank guarantee should be restrained so that the appellate remedy is not rendered ineffective. The High Court granted interim protection against recovery of penalty until the stay application was decided and directed the appellate authority to dispose of that application within fifteen days. The ruling reflects the principle that pending appellate consideration must be preserved from coercive enforcement measures that would defeat the purpose of the stay request.

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Issues: Whether the assessing authority could proceed with recovery by encashment of bank guarantee while the petitioner's stay application under the appellate remedy remained pending.

Analysis: The petitioner had invoked the statutory appellate remedy and had also filed an application for stay under section 20(5) of the Punjab General Sales Tax Act, 1948. The pendency of that stay application required protection against coercive recovery, since recovery proceedings by encashment of the bank guarantee would defeat the purpose of the pending appellate consideration. The Court therefore found justification to restrain recovery until the stay application was decided.

Conclusion: The coercive recovery of penalty by encashment of the bank guarantee was not permitted until the appellate authority decided the stay application, and the authority was directed to decide the application within fifteen days.

Final Conclusion: Interim protection was granted to preserve the efficacy of the appellate remedy and the pending stay application, with a direction for expeditious disposal by the appellate authority.

Ratio Decidendi: Where a statutory stay application is pending before the appellate authority, coercive recovery should be restrained so that the appellate remedy is not rendered ineffective.

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