Pre-deposit discretion upheld where the Tribunal recorded a prima facie merits view and found no arbitrariness in reduction.

Discretion to fix or reduce pre-deposit will not be interfered with unless the exercise is arbitrary or unreasonable. The Tribunal upheld a reduced pre-deposit after recording a prima facie view on the merits in favour of the assessee, and the High Court noted that no substantial question of law arose from that approach. It further stated that section 73(3) does not make financial hardship a mandatory factor for waiver of pre-deposit. As the appellate discretion was exercised reasonably and without legal infirmity, the challenge to the order failed.

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Issues: Whether the Tribunal was justified in reducing the pre-deposit directed by the first appellate authority and restoring the appeal for decision on merits, and whether such order gave rise to any substantial question of law.

Analysis: The Tribunal had examined the merits and recorded a prima facie view in favour of the assessee, relying on its earlier decision to hold that the reduced pre-deposit was justified. The power to direct pre-deposit is discretionary and must be exercised reasonably. In the absence of arbitrariness or unreasonableness in the exercise of that discretion, no question of law arises. The Court also held that section 73(3) of the Act does not contemplate financial hardship as a mandatory factor for waiver of pre-deposit.

Conclusion: The Tribunal's order reducing the pre-deposit and restoring the appeal did not suffer from legal infirmity and did not give rise to a substantial question of law; the challenge failed.

Ratio Decidendi: Where the appellate authority exercises its discretion on pre-deposit after recording a prima facie view on merits, and the statute does not require consideration of financial hardship, such order is not interfered with unless the discretion is shown to be arbitrary or unreasonable.

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