Stay of recovery under Kerala VAT law follows statutory 20% deposit, which need not be made when filing the appeal.

The proviso to section 55(4) of the Kerala Value Added Tax Act permits stay of recovery on remittance of 20% of the disputed tax, together with any collected tax, and does not require the deposit to be made at the time the appeal is filed. The first appellate authority may assess the stay request on a prima facie basis and, where no mitigation is justified, insist on the statutory 20% deposit, but it cannot demand a sum beyond the proviso's ceiling. The assessee may invoke the provision at any stage before disposal of the appeal, and recovery remains in abeyance while the stay petition is considered in accordance with the statute.

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Issues: Whether the proviso to Section 55(4) of the Kerala Value Added Tax Act, 2003 permits stay of recovery on payment of 20% of the disputed tax even if the deposit is made after filing the appeal, and whether the first appellate authority can insist on a deposit beyond the statutory threshold.

Analysis: The proviso provides for a stay of recovery till disposal of the appeal once 20% of the disputed tax, together with collected tax if any, is remitted. There is no requirement in the provision that the deposit must be made at the time of filing the appeal. The statutory scheme also limits the appellate authority's discretion: while the authority may examine the merits prima facie to decide whether further reduction from the 20% should be granted, it cannot insist on a deposit beyond the amount contemplated by the proviso. If no mitigation is warranted, directing deposit of 20% is valid, failing which recovery may proceed.

Conclusion: The assessee is entitled to invoke the proviso at any stage before disposal of the appeal, and the appellate authority must consider the stay petition in accordance with the proviso without travelling beyond the statutory ceiling. Recovery was to remain in abeyance for two months pending such consideration.

Final Conclusion: The writ petitions were disposed of with directions to the first appellate authority to decide the stay petitions under the statutory proviso and with interim protection against recovery during that period.

Ratio Decidendi: Where a fiscal provision grants a stay of recovery on partial deposit, the appellate authority must apply the statute as written and cannot impose a deposit condition beyond the prescribed threshold, while the statutory option may be exercised without any express requirement that it be invoked only at the time of filing the appeal.

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