Interim stay on disputed tax recovery cannot be denied by pre-judging merits when statutory appeal is pending.

Where an assessee had already deposited 12.5% of the disputed tax to pursue a statutory appeal, the authority considering a stay application was required to assess only whether a prima facie case existed for interim protection. It was not justified in entering findings on the merits while the appeal remained pending, as such observations could prejudice appellate adjudication. On that basis, coercive recovery of the remaining disputed tax during the pendency of the appeal was held unjustified, and refusal of stay was unsustainable.

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Issues: Whether the revisionary authority was justified in refusing stay of recovery of the disputed tax amount and making observations on the merits while the assessee's appeal was pending; and whether coercive recovery of the balance tax could be pursued after payment of 12.5% of the disputed tax for the purpose of maintaining the appeal.

Analysis: The disputed demand arose under the Andhra Pradesh Value Added Tax Act, 2005 and the assessee had already deposited 12.5% of the tax to avail the statutory appeal. In that situation, the authority dealing with the stay request was required to consider only whether a prima facie case existed for interim protection. It was not appropriate for that authority to pronounce upon the merits of the dispute, particularly when the appeal was still pending before the appellate authority. Such comments could prejudice the appellate adjudication. The insistence on recovery of the remaining tax during the pendency of the appeal was therefore found to be unjustified.

Conclusion: The refusal to grant stay was unsustainable and coercive recovery of the balance disputed tax amount could not be pursued until the appeal was decided.

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