Strong prima facie case and binding precedent can justify fuller interim stay protection despite claimed financial hardship.

A strong prima facie case supported by binding precedent justified broader interim stay protection, and financial hardship could not be used to curtail relief where the governing law had already been settled. The High Court noted that the Tribunal had limited the stay to 80% of the disputed demand despite an earlier ruling treating mosquito coils as insecticides taxable at 4% under the U.P. VAT Act. It held that the alleged turnover increase from undisclosed transactions was nominal and did not justify restricting protection. The stay order was therefore modified, subject to deposit and security conditions, and the matter was disposed of on those revised terms.

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Issues: Whether the assessee was entitled to modification of the interim stay order by granting stay of the disputed demand on a stronger basis in view of a binding prima facie case.

Analysis: The Tribunal had stayed only 80% of the demand, but the assessee relied on a Full Bench ruling that mosquito coils are insecticides taxable at 4% under Entry No. 22 of Schedule-II of the U.P. VAT Act, 2008. The Court applied the settled principle that where an assessee has a strong prima facie case supported by an earlier binding decision of the Tribunal or the High Court, the question of financial hardship loses significance. The alleged increase in turnover due to undisclosed transactions was found to be nominal and did not justify denial of appropriate interim protection. The Tribunal was found to have overlooked the governing law while granting the limited stay.

Conclusion: The assessee was entitled to modified interim relief, and the stay direction was altered to grant protection against 80% of the disputed amount on conditions for deposit and security.

Final Conclusion: The revision succeeded to the extent of modification of the interim stay order, with the proceedings disposed of subject to the revised conditions of stay.

Ratio Decidendi: Where an assessee establishes a strong prima facie case supported by binding precedent, financial hardship is not a relevant ground to curtail interim stay protection.

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