Interim protection in tax classification dispute granted against interest deposit, with expeditious hearing ordered

Interim protection was granted against deposit of interest on disputed differential tax during pendency of the appeal because the matter concerned classification of goods and the applicable tax rate, not tax evasion. The petitioner had already deposited the differential tax under protest, and the refusal of stay by the Tax Board was non-speaking and did not reflect a reasoned exercise of discretion. The Court balanced the bona fide nature of the dispute and the petitioner's status as a regular business against the demand for interim relief, and also accepted the request for early hearing. The appeal was directed to be decided expeditiously.

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Issues: Whether the petitioner was entitled to interim protection against deposit of interest on the disputed differential tax during pendency of the appeal, and consequential early disposal of the appeal.

Analysis: The dispute concerned classification of the goods manufactured by the petitioner and the applicable rate of tax, not tax evasion. The petitioner had already deposited the differential tax under protest. The order of the Tax Board declining stay was non-speaking and did not disclose any reasoned exercise of discretion. In these circumstances, interim protection had to be balanced against the facts of the case, including the bona fide nature of the dispute and the fact that the petitioner was not a fly-by-night operator. The Court also accepted the request for early hearing of the appeal.

Conclusion: The petitioner was entitled to stay of deposit of interest on the disputed differential tax during pendency of the appeal, and the Tax Board was directed to decide the appeal expeditiously.

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