Prima facie strength and undue hardship can justify complete stay of demand when the supporting precedent has been overruled.

Where an assessed demand rested exclusively on an earlier precedent later overruled by a Constitution Bench, the stay application was supported by a strong prima facie case in appeal. The Court applied settled stay principles, requiring consideration of prima facie merit, likelihood of success, and undue hardship from insisting on deposit. As the appeal remained pending and further recovery would risk rendering the appeal ineffective, complete stay of the remaining demand was granted until expeditious disposal of the appeal.

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Issues: Whether the assessee was entitled to complete stay of the assessed demand pending disposal of the appeal.

Analysis: The demand had been sustained by the assessing authority by relying exclusively on the earlier view treating the transaction as a sale contract. The Court noted that the foundation of that view had been displaced by the later Constitution Bench ruling overruling the earlier precedent. The Court also applied the settled principles governing stay, namely that the authority must consider prima facie strength of the case, the likelihood of success in appeal, and whether insistence on deposit would cause undue hardship. Since the appeal remained pending and the assessee had a strong prima facie case, further recovery was not justified.

Conclusion: The assessee was held entitled to complete stay of the demand during pendency of the appeal.

Final Conclusion: The revision succeeded, the Tribunal's order was modified, and recovery of the remaining demand was stayed until the appeal was decided expeditiously.

Ratio Decidendi: Where the demand is founded solely on a precedent that has subsequently been overruled, and the assessee shows a strong prima facie case, the appellate authority must grant stay to avoid undue hardship and prevent recovery from rendering the appeal ineffective.

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