Tax recovery stayed pending appeal where assessee gave security and delay in disposal was not attributable to it.

Coercive recovery of a disputed tax demand may be restrained pending disposal of statutory appeals where the assessee has already paid part of the demand, furnished bank guarantees for the balance, and the delay in hearing the appeals is not attributable to the assessee. Applying Section 63(7)(b) of the Karnataka Value Added Tax Act, 2003, the HC protected the assessee from recovery action until the appeals are decided and directed the appellate tribunal to dispose of the pending appeals expeditiously within three months. The operative effect was interim protection against recovery combined with a time-bound mandate for appellate adjudication.

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Issues: Whether recovery of the disputed tax demand could be kept in abeyance pending disposal of the statutory appeals, and whether the appellate tribunal should be directed to decide the appeals within a fixed time.

Analysis: The petitioner had already deposited 30% of the disputed tax and furnished bank guarantees for the balance amount. The appeals were not disposed of within one year from the date of the interim stay, and the delay was not attributable to the petitioner. In these circumstances, and having regard to the mandate of Section 63(7)(b) of the Karnataka Value Added Tax Act, 2003, the Court found it appropriate to protect the assessee from coercive recovery while ensuring speedy adjudication of the pending appeals.

Conclusion: Recovery of the balance disputed tax was directed to remain stayed until disposal of the appeals, and the appellate tribunal was directed to dispose of the appeals expeditiously within three months.

Final Conclusion: The writ petitions were disposed of with interim protection against recovery and a time-bound direction for disposal of the appeals.

Ratio Decidendi: Where the delay in disposal of a tax appeal is not attributable to the assessee and adequate security has been furnished, coercive recovery of the disputed demand may be restrained pending appellate adjudication, with a direction for expeditious disposal of the appeal.

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