Prima facie merits and financial hardship must guide stay discretion in statutory appeals, avoiding illusory deposit conditions.

While deciding stay or waiver-cum-stay in a pending statutory appeal, the authority must consider both prima facie merits and the applicant's financial hardship; an onerous deposit condition may make the appeal illusory. The discretion to grant interim protection must be exercised judicially on sound principles, not mechanically. Applying that approach, the order was modified and greater interim protection was granted, with most of the disputed tax stayed and only a limited deposit required, backed by security for the balance.

---

---

Issues: Whether the stay order passed in the pending first appeal required reconsideration on the basis of prima facie merits and the applicant's financial hardship.

Analysis: While dealing with stay or waiver-cum-stay during the pendency of a statutory appeal, the authority must apply its mind to the prima facie merits of the case as well as the financial condition of the applicant. Relevant factors such as financial hardship and undue hardship cannot be ignored, because an onerous deposit condition may make the statutory right of appeal illusory. The stay discretion must therefore be exercised judicially and on sound principles, not by a routine or mechanical approach.

Conclusion: The Tribunal's order was modified and the applicant was granted greater interim protection, with 90% of the disputed tax stayed and only 10% directed to be deposited with security for the balance amount.

---