Interim stay in sales tax dispute upheld on payment condition, while security requirement was relaxed

In a sales tax interim matter, the Madras HC treated the dispute as one of discretionary relief pending appeal before the Tribunal. It noted that the stay order already protected the assessee by suspending 75% of the disputed demand, and declined to interfere with the direction to pay 25% in view of the stage of proceedings and the close of the financial year. However, the requirement to furnish security was modified, and a personal bond of the directors was accepted instead. The payment condition was left intact, but the security stipulation was relaxed.

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Issues: Whether the Tribunal's interim order granting stay of 75% of the disputed tax, coupled with a direction to pay 25% and furnish security, warranted interference in writ jurisdiction.

Analysis: The challenge arose at the interlocutory stage in a sales tax matter for which the assessment had already been confirmed by the appellate authority and the main appeal was pending before the Tribunal. The Court treated the question as one relating to interim discretion in a fiscal statute and noted that the impugned order substantially protected the petitioner by staying 75% of the disputed demand. The Court also took account of the approaching close of the financial year and declined to interfere with the payment direction. At the same time, the direction to furnish security was found appropriate for modification, and the petitioner was directed to furnish personal bond of the directors instead.

Conclusion: The interim order was not interfered with on the payment of tax, but the security condition was modified in favour of the petitioner.

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