Interim stay of tax recovery requires a prima facie case; conditional relief was upheld where no tenable challenge was shown.

Interim stay of tax recovery depends on the assessee showing tenable grounds and a prima facie case against the assessment. Where the assessee failed to file the annual return, produce books of account, respond to the pre-assessment notice, or substantiate the returned turnover, the best-judgment assessment and the conditional stay requiring partial payment and security were treated as a proper exercise of discretion. Allegations of misplaced records and financial hardship were insufficient for a blanket stay, and the High Court declined to interfere under Article 226 because the stay order was neither mechanical nor arbitrary.

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Issues: Whether the appellate authority was justified in granting stay of recovery of the balance tax only on condition of payment of 50 per cent of the demand and furnishing security for the balance, and whether the High Court should interfere with that interim order under Article 226.

Analysis: The assessee had not filed the annual return, had not produced books of account despite notices, had not responded to the pre-assessment notice, and had not supported the returned turnover with evidence. The assessment had to be completed to avoid limitation and was made to the best of judgment. The stay petition did not disclose tenable grounds showing illegality or unsustainability of the assessment order, and pleas of misplaced records and financial hardship were found insufficient for a blanket stay. In these circumstances, the appellate authority's conditional stay order could not be treated as mechanical or unreasoned, and no interference was warranted with the single judge's refusal to intervene.

Conclusion: The conditional stay order was upheld and interference was declined.

Final Conclusion: The assessee was not entitled to complete stay of recovery, and the appellate and single judge orders were sustained.

Ratio Decidendi: Interim stay of tax recovery is a matter of judicial discretion to be exercised on tenable grounds showing a prima facie case, and the High Court will not interfere where the assessee fails to furnish such grounds and the conditional stay is not arbitrary.

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