Interim stay of tax demand requires balance of convenience; complete waiver is unavailable despite an arguable prima facie case.

Interim stay of disputed tax demand is governed by settled discretionary principles, including prima facie case, balance of convenience and revenue interests, and a taxpayer cannot full waiver merely by asserting an arguable case. The HC noted that the assessing authority had recorded material reasons, including an incomplete Form-38 entry and suspected misuse, to justify provisional assessment under Section 25(1) of the Uttar Pradesh Value Added Tax Act, 2008, so no patent lack of jurisdiction was shown. It also held that directing deposit of 20% and staying the remaining 80% was a proper exercise of discretion, and the limited stay condition was sustained.

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Issues: (i) Whether the assessee was entitled to complete stay of the disputed tax demand at the interim stage on the basis of a claimed strong prima facie case. (ii) Whether the requirements for initiating provisional assessment under Section 25(1) of the Uttar Pradesh Value Added Tax Act, 2008 were made out on the facts. (iii) Whether the Tribunal erred in directing deposit of 20% of the disputed amount and staying the remaining 80% only.

Issue (i): Whether the assessee was entitled to complete stay of the disputed tax demand at the interim stage on the basis of a claimed strong prima facie case.

Analysis: The power to grant stay pending appeal is not absolute and must be exercised on settled interim principles, including prima facie case, balance of convenience, and the overall interests of both sides. A prima facie case does not mean that the revenue must be shown to have no case at all. Even where some arguable case is shown, complete dispensation of the disputed demand cannot follow as of right.

Conclusion: The assessee was not entitled to complete stay of the disputed demand.

Issue (ii): Whether the requirements for initiating provisional assessment under Section 25(1) of the Uttar Pradesh Value Added Tax Act, 2008 were made out on the facts.

Analysis: The assessment authority relied on a checking in which a material document was found incomplete, including omission in the relevant column of Form-38, which was treated as a circumstance indicating possible misuse and tax evasion. The authority recorded reasons showing that the turnover disclosed was not worthy of credence and that there was material justifying provisional assessment. The challenge to jurisdiction therefore did not show a patent lack of authority.

Conclusion: The requirements for provisional assessment were made out.

Issue (iii): Whether the Tribunal erred in directing deposit of 20% of the disputed amount and staying the remaining 80% only.

Analysis: The appellate authority and the Tribunal were required to balance the interests of the assessee and the revenue. Since the disputed assessment order continued to operate and the assessee had not established a right to full waiver of deposit, the direction to deposit only 20% of the disputed amount was a proper exercise of discretion and not shown to be perverse or mechanical.

Conclusion: The Tribunal did not err in restricting the stay to 80% and requiring deposit of 20%.

Final Conclusion: The interim orders were sustained and the revisions failed, leaving the assessee liable to comply with the limited deposit condition pending appeal.

Ratio Decidendi: At the interim stage of an appeal against assessment, stay of disputed tax is governed by judicially recognised discretionary principles, and complete waiver cannot be claimed merely on the assertion of a prima facie case when the assessment authority has recorded material reasons supporting provisional assessment.

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