Statutory pre-deposit bars coercive recovery of disputed VAT pending appeal; garnishee orders and stay refusal were quashed.

Where an assessee has already made the statutory pre-deposit required to maintain the appeal, coercive recovery of the remaining disputed VAT and penalty during pendency of that appeal cannot ordinarily be sustained. Applying that principle, the High Court held that refusal to grant stay and the garnishee orders issued under Section 29 were unjustified, because the pre-deposit condition had been met and the same reasoning applied before both the appellate authority and the Tribunal. The recovery proceedings were quashed and the impugned orders were set aside.

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Issues: Whether the tax authorities were justified in refusing stay of collection of the balance disputed VAT and penalty and in issuing garnishee orders under Section 29 despite the assessee having already deposited 12.5% or more of the disputed tax pending appeal.

Analysis: The assessee had already complied with the statutory pre-deposit requirement for maintaining the appeals before the appellate authorities. A prior Division Bench view, later affirmed by the Supreme Court, had held that once the prescribed percentage of disputed tax had been deposited, coercive recovery of the remaining amount during pendency of the appeal was unjustified. The respondents did not dispute that principle, and the same reasoning applied to the petitions before the Appellate Deputy Commissioner as well as the Tribunal.

Conclusion: The refusal to grant stay and the garnishee orders were unjustified, and the challenge succeeded in favour of the assessee.

Final Conclusion: The recovery proceedings were quashed and the impugned orders were set aside in all the writ petitions.

Ratio Decidendi: Where the assessee has already made the statutory pre-deposit for an appeal, coercive recovery of the balance disputed tax during the pendency of that appeal cannot ordinarily be sustained.

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