Prima facie case and stay factors must be considered before ordering recovery during a tax appeal.

Interim stay of recovery against a disputed VAT demand must be decided by examining the applicant's prima facie case, the relevant stay factors, and the effect of insisting on recovery during appeal. The impugned stay orders were found deficient because they did not record any finding on prima facie merit and did not show application of mind to the governing principles for interim relief. The partial stay orders were set aside and the stay application was directed to be reconsidered afresh in accordance with law.

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Issues: Whether the orders granting partial stay of recovery of disputed VAT demand were liable to be set aside for failure to consider the applicant's prima facie case and other relevant factors while deciding the stay application.

Analysis: The stay orders passed by the first appellate authority and the Tribunal did not record any finding on the applicant's prima facie case. The authorities proceeded without showing application of mind to the binding legal principles governing interim relief, including the need to examine the strength of the claim, the relevant factors bearing on stay, and the consequences of insisting on recovery pending appeal. The orders were therefore treated as lacking the required reasoning for deciding a stay application.

Conclusion: The partial stay orders were set aside and the stay application was directed to be reconsidered afresh in accordance with law.

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