Conditional stay against penalty recovery granted where no assessment order existed and financial hardship was shown.

Interim recovery of a penalty demand was modified where no assessment order had been passed, the dispute arose in penalty proceedings, and the assessee demonstrated financial hardship. The Court balanced the rival interests by upholding protection from recovery of the balance demand while directing a partial deposit as a condition for continued stay. The revision was disposed of with modification of the stay arrangement and with directions for expeditious disposal of the appeal.

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Issues: Whether the order granting partial stay against recovery of the disputed penalty required modification in view of the absence of an assessment order, the nature of the transaction, and the assessee's pleaded financial hardship.

Analysis: The dispute arose from a penalty order under the entry tax law. The challenge before the Court was confined to interim protection against recovery pending disposal of the appeal. The Court noted that no assessment order had been passed and that the matter involved penalty proceedings. It also took into account the financial position placed before it. In these circumstances, the Court found that the stay order of the Tribunal called for limited modification and balanced the rival interests by requiring a partial deposit while granting protection from recovery of the remaining demand.

Conclusion: The assessee was granted further interim relief by way of conditional stay against recovery of the balance amount, subject to deposit of a specified sum.

Final Conclusion: The revision was disposed of with modification of the stay arrangement and directions for expeditious disposal of the appeal.

Ratio Decidendi: In matters of interim recovery of tax penalty, the Court may grant conditional stay where the assessee shows a prima facie case and financial hardship, especially when no assessment order has been passed.

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