Judicial exercise of stay discretion in tax appeals requires reasons; a mechanical cash-and-guarantee split was invalid.

An appellate authority's stay discretion under section 20(3)(b) of the Karnataka Sales Tax Act, 1957 must be exercised judicially on relevant material and supported by reasons. A conditional stay directing part payment in cash and the balance by bank guarantee is invalid if made mechanically without addressing the assessee's grounds, including a claim of double taxation on the same turnover. Because the impugned order contained no meaningful consideration of the facts or submissions and reflected non-application of mind, the High Court held the stay order unsustainable and the challenge succeeded.

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Issues: Whether the appellate authority's stay order, directing payment of 50% in cash and the balance by bank guarantee without recording reasons, was sustainable in law.

Analysis: Section 20(3)(b) of the Karnataka Sales Tax Act, 1957 confers discretion on the appellate authority to issue directions regarding payment of tax and furnishing of security. That discretion must be exercised judicially and on the basis of relevant material. A conditional stay order affecting recovery cannot be made mechanically; the order must disclose application of mind and reasons, especially where the assessee asserts that the very same turnover has been subjected to tax twice and seeks stay of recovery pending appeal. The impugned order contained no meaningful consideration of the facts or the grounds urged and merely fixed an arbitrary cash and bank guarantee split.

Conclusion: The stay order was unsustainable for non-application of mind and mechanical exercise of discretion, and the challenge succeeded.

Ratio Decidendi: Discretion under the stay proviso in tax appeals must be exercised judicially by recording reasons and considering relevant facts and the assessee's financial and legal grounds; a mechanical conditional stay order is invalid.

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