Interim stay in tax appeals requires consideration of prima facie case and undue hardship before recovery is enforced.

While deciding stay or waiver of pre-deposit in tax proceedings, the authority must apply its mind to the assessee's prima facie case on merits and to undue financial hardship, balancing the right of appeal against revenue protection. An order should disclose that these mandatory factors were considered. The impugned stay orders were found deficient because they did not reflect such consideration, and the assessee obtained limited interim protection against recovery pending disposal of the appeal.

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Issues: Whether the appellate authority and the Tribunal were required to record consideration of the assessee's prima facie case and financial hardship while deciding the prayer for stay and waiver of pre-deposit pending appeal.

Analysis: Interim relief in tax matters cannot be granted mechanically. The authority must apply its mind to the existence of a prima facie case on merits and the question of undue hardship, while balancing the right of appeal against the interests of the revenue. An order on stay or waiver should disclose that these mandatory considerations were examined. In the present matter, the impugned orders did not indicate such application of mind to the relevant factors.

Conclusion: The stay orders were found deficient for non-consideration of the relevant legal requirements, and the assessee obtained temporary protection against recovery for the period directed by the Court.

Final Conclusion: The revision was disposed of with a direction for expeditious disposal of the first appeal, and recovery of the assessed tax was stayed for the limited period granted.

Ratio Decidendi: While deciding a request for interim stay or waiver of pre-deposit in tax proceedings, the authority must consider the assessee's prima facie case and undue hardship and must reflect such application of mind in the order.

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