Complete stay of disputed tax demand granted where assessment relied on an overruled legal view and appeal remained pending

Where an assessment rested exclusively on a legal view later overruled by a Constitution Bench, and the statutory appeal remained pending, the assessee had a strong prima facie case for complete stay of the disputed demand. The Court held that recovery in those circumstances would defeat the appellate remedy and cause undue hardship, so the remaining demand was stayed in full and the order was modified. The pending appeal was also directed to be decided expeditiously in accordance with law.

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Issues: Whether the assessee was entitled to complete stay of the outstanding tax demand pending disposal of the statutory appeal, in view of the later Constitution Bench ruling on lifts/elevators contracts and the pendency of the appeal before the Appellate Authority.

Analysis: The demand had been made by treating the lift supply-and-installation contract as a sale contract on the basis of the earlier view subsequently overruled by the Constitution Bench. The dispute before the Appellate Authority remained pending, and the Court held that where the foundational precedent relied upon for assessment no longer held the field, the assessee had a strong prima facie case for stay. In such circumstances, insistence on recovery of the remaining demand would defeat the appellate remedy and cause undue hardship.

Conclusion: The assessee was entitled to complete stay of the remaining demand and the Tribunal's order was modified accordingly.

Final Conclusion: The revision was allowed, the remaining recovery was stayed, and the Appellate Authority was directed to decide the pending appeal expeditiously in accordance with law.

Ratio Decidendi: Where the assessment is founded exclusively on a legal view that has been overruled, and the statutory appeal is still pending, complete stay of the disputed demand may be granted on the basis of a strong prima facie case and to prevent undue hardship.

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