Statutory pre-deposit for tax appeal stay upheld as a 25% deposit condition matched the appeal framework.

The Madras HC noted that the assessee's statutory appeal under section 52 of the Tamil Nadu Value Added Tax Act, 2006 was subject to the second proviso requiring payment of 25% of the dues between the assessed tax and the tax admitted to be due before the appeal is entertained. On that basis, a stay condition directing deposit of 25% of the demand was held to match the statutory appeal mechanism and not to be unreasonable or arbitrary. The challenge to the conditional stay therefore failed.

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Issues: Whether the condition directing deposit of 25% of the demand while granting stay was unreasonable or arbitrary in view of the statutory appeal mechanism under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The assessment orders treated the goods manufactured and sold by the appellant as machines and not capital goods, and the assessee had a statutory appeal under section 52 of the Tamil Nadu Value Added Tax Act, 2006. The second proviso to section 52 requires payment of 25% of the dues between the assessed tax and the tax admitted to be due before the appeal is entertained. In that backdrop, the condition imposed by the learned single judge for stay matched the statutory requirement and could not be characterised as unreasonable or arbitrary.

Conclusion: The condition requiring deposit of 25% of the demand was upheld and the challenge to the conditional stay failed.

Ratio Decidendi: Where the statute itself prescribes a pre-deposit of 25% for admission of the appeal, a stay condition requiring the same deposit is not unreasonable or arbitrary.

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