Interim stay of tax recovery granted without cash deposit where levy of surcharge remained a substantive legal dispute.

Pending revision applications and second appeals over levy of motor spirit tax surcharge, the Court held that interim recovery need not remain conditional on deposit where the dispute raises a substantive question on the charging provision and related rules. The assessee's public sector character and the absence of any demonstrated risk that dues would become unrecoverable justified replacing the cash deposit requirement with an unconditional stay of recovery. Revenue protection was preserved by requiring an undertaking to deposit the demand, with interest and surcharge, if the final decision went against the petitioner.

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Issues: Whether, pending disposal of the revision applications and second appeals concerning levy of motor spirit tax surcharge, the recovery directed by the appellate/revisional authority should be stayed unconditionally instead of subject to deposit.

Analysis: The dispute turned on interpretation of the charging provision and the relevant rules governing levy of tax and surcharge, including the contention that if tax itself was not leviable, surcharge could not be recovered as an addition to tax. Considering the nature of the controversy, the public sector character of the petitioner, and the absence of a real apprehension that recovery would become impossible if the proceedings ultimately failed, the Court found that insistence on immediate monetary deposit was unnecessary at the interim stage. The Court therefore substituted the deposit condition with a stay of recovery, while safeguarding the revenue by requiring an undertaking to deposit the demand with interest and surcharge if the final decision went against the petitioner.

Conclusion: The recovery was stayed unconditionally pending disposal of the revision applications and second appeals, subject to an undertaking by the petitioner to comply with any adverse final order.

Ratio Decidendi: Where the dispute is a substantive question of levy and the assessee is a public sector entity with no demonstrated risk of unrecoverable dues, an appellate court may grant unconditional interim stay of recovery and secure the revenue by an undertaking instead of insisting on cash deposit.

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