Pending stay applications escape amended pre-deposit rules; onerous deposit conditions may be reduced on proportionality grounds.

The amended pre-deposit regime under Section 35F did not apply to a stay application already pending on the commencement date of the Finance Act, 2014, because the second proviso excluded pending stay applications and appeals before appellate authorities. The Tribunal's pre-deposit direction was also treated as onerous in light of the total demand and associated penalty, so the deposit condition was moderated to balance the parties' interests. The appellant therefore obtained partial relief through reduction of the pre-deposit requirement, while the stay continued subject to compliance with the revised condition.

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Issues: (i) Whether the amended pre-deposit regime under Section 35F applied to a stay application already pending before the commencement of the Finance Act, 2014; (ii) whether the Tribunal's direction to deposit Rs. 8,00,000 was excessive and liable to be reduced.

Issue (i): Whether the amended pre-deposit regime under Section 35F applied to a stay application already pending before the commencement of the Finance Act, 2014.

Analysis: The second proviso to Section 35F excluded its application to stay applications and appeals pending before any appellate authority prior to the commencement of the Finance Act, 2014. Since the stay application was pending on the relevant commencement date, the amended provision could not govern the appellant's request.

Conclusion: The amended pre-deposit requirement did not apply to the pending stay application.

Issue (ii): Whether the Tribunal's direction to deposit Rs. 8,00,000 was excessive and liable to be reduced.

Analysis: The total demand included service tax, education cess, secondary and higher education cess, along with an equal amount of penalty under Section 78 of the Finance Act, 1994. Taking the totality of the demand and the penalty into account, the directed deposit was found to be too onerous. The amount was therefore moderated to balance the interests of the parties and the request for stay.

Conclusion: The pre-deposit amount was reduced to Rs. 5,00,000.

Final Conclusion: The appellant obtained partial relief by securing a reduction in the pre-deposit condition, and the balance dues remained stayed subject to compliance with the modified deposit direction.

Ratio Decidendi: The amended pre-deposit provision under Section 35F does not apply to stay applications pending on the date of commencement of the Finance Act, 2014, and an appellate court may reduce an onerous pre-deposit requirement after considering the total demand and penalty.

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