Solvent security under VAT appeal rules cannot be displaced by an unexplained bank guarantee requirement in stay proceedings.

Rule 77 of the Rajasthan VAT Rules permits solvent security to safeguard revenue in pending appeal proceedings, and an unexplained departure requiring a bank guarantee was held unsustainable where similar matters had accepted bond and surety security. The writ challenge to the interim stay condition was also found maintainable because the order was not revisable, and the later rectification order did not create a fresh cause of action. The stay condition was modified to allow solvent security instead of a bank guarantee, and early disposal of the appeal was directed.

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Issues: (i) Whether, under Rule 77 of the Rajasthan Value Added Tax Rules, 2006, the assessee could be directed to furnish a bank guarantee instead of solvent security as a condition for stay of recovery pending appeal; (ii) whether the writ petition was maintainable against the Tax Board's interim order and the subsequent rectification order.

Issue (i): Whether, under Rule 77 of the Rajasthan Value Added Tax Rules, 2006, the assessee could be directed to furnish a bank guarantee instead of solvent security as a condition for stay of recovery pending appeal.

Analysis: The impugned stay condition required a bank guarantee for the disputed amount even though, in similar matters, the Tax Board had accepted solvent security by way of a bond in prescribed form with sureties under Rule 77. The Court noted that no material justified a departure from the consistent approach followed in comparable cases and that the petitioner had been treated differently without justification.

Conclusion: The condition requiring a bank guarantee was unsustainable, and the assessee was entitled to furnish solvent security in the manner contemplated by Rule 77.

Issue (ii): Whether the writ petition was maintainable against the Tax Board's interim order and the subsequent rectification order.

Analysis: The challenge was directed primarily against the interim order imposing the bank guarantee condition. The Court held that the order was not a revisable order and that the rectification order did not create a separate cause of action, as it merely sustained the earlier order. The objection to maintainability was therefore rejected.

Conclusion: The writ petition was maintainable.

Final Conclusion: The impugned stay condition was modified so that the assessee could secure the disputed amount by solvent security instead of a bank guarantee, and the writ petition succeeded with a further direction for early disposal of the appeal.

Ratio Decidendi: Where the statutory rule contemplates solvent security to safeguard the revenue in pending appeal proceedings, an arbitrariness or unexplained departure to insist on a bank guarantee is liable to be interfered with in writ jurisdiction.

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