Personal bond may replace bank guarantee for stay in tax appeals, subject to an additional 25% deposit.

In pending tax appeals under the Tamil Nadu Value Added Tax Act, the Court held that a bank guarantee was not mandatory for continuation of stay where a personal bond and an additional deposit of 25% of the disputed tax would adequately secure the demand. Following earlier orders, it balanced revenue protection with taxpayer hardship and substituted the bank guarantee condition with a personal bond plus the further deposit. On compliance, the appellate authority was to hear and decide the appeals on merits, and the existing stay would continue until that disposal.

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Issues: Whether, in the pending tax appeals, the appellate authority could insist on furnishing a bank guarantee for the balance amount of disputed tax, or whether execution of a personal bond with an additional deposit of 25% of the disputed tax would suffice for continuation of stay.

Analysis: The petitions arose from orders passed on stay applications filed along with first appeals under Section 51 of the Tamil Nadu Value Added Tax Act, 2006. The Court noted the petitioner's request for relief from the requirement of bank guarantee and followed earlier orders where personal bond had been accepted as an alternative condition. Balancing the requirement of securing the disputed demand with the hardship pleaded, the Court directed payment of a further 25% of the disputed tax and execution of a personal bond instead of a bank guarantee. On compliance, the appellate authority was required to dispose of the appeals on merits and the existing stay was to continue until such disposal.

Conclusion: The requirement of bank guarantee was waived and replaced by a personal bond, subject to an additional deposit of 25% of the disputed tax, in favour of the assessee.

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