Conditional interim relief may survive a cheque tender where payment was not unconditional and disclosure issues arose.

A stay order granting protection against recovery may be reconsidered if a material fact was not disclosed when the stay application was heard, but such reopening must be based on a proper appreciation of the circumstances. Issuance of a cheque for the disputed penalty amount does not, by itself, extinguish the right to interim relief where the tender was not unconditional and the covering communication reserved the assessee's position if stay was granted. Conditional interim protection may still be appropriate, particularly where the dispute concerns penalty at the maximum rate and revenue interests can be safeguarded by an appropriate condition.

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Issues: (i) Whether the authority was justified in reopening and vacating the earlier order granting stay of recovery of penalty, and (ii) whether issuance of a cheque for the penalty amount by itself disentitled the assessee to interim protection pending disposal of the appeal.

Issue (i): Whether the authority was justified in reopening and vacating the earlier order granting stay of recovery of penalty.

Analysis: A stay order is not immune from reconsideration, though such power cannot be exercised lightly or routinely. The assessee had withheld a material fact regarding issuance of the cheque when the stay application was heard, and that non-disclosure could justify reopening of the matter. At the same time, the later order proceeded on an incomplete appreciation of the surrounding circumstances.

Conclusion: The reopening of the stay matter was not wholly impermissible, but the order vacating stay could not stand on the reasoning adopted by the authority.

Issue (ii): Whether issuance of a cheque for the penalty amount by itself disentitled the assessee to interim protection pending disposal of the appeal.

Analysis: The cheque was issued while the stay application was pending, and the covering letter specifically stated that the cheque could be returned if stay was granted. The tender was therefore not unconditional. Since the dispute related to penalty levied at the maximum rate, the equities favoured continued protection, subject to a safeguard for the revenue.

Conclusion: Issuance of the cheque did not by itself bar interim relief, and conditional protection was warranted.

Final Conclusion: The assessee was granted conditional interim protection against encashment of the cheque and coercive recovery of the disputed penalty, on payment of a specified amount within the time fixed, pending disposal of the statutory appeal.

Ratio Decidendi: A stay order may be revisited where a material fact was not disclosed, but issuance of a cheque does not automatically defeat interim relief when the payment was not unconditional and the equities justify protection.

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