Interim stay in tax appeal extended where disputed demand was secured by partial payment and bank guarantee.

Interim stay in a Tamil Nadu Value Added Tax appeal was extended because the disputed tax had been sufficiently secured: the petitioner had paid 25% of the demand and furnished a bank guarantee for the balance. In these circumstances, continuation of the stay was treated as necessary to protect the pending appeal, and refusal to extend it was found unjustified. The appellate authority was directed to dispose of the appeal on merits and in accordance with law, while the interim stay was ordered to continue until that disposal, subject to the bank guarantee being kept alive.

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Issues: Whether the interim stay granted in the appeal deserved extension pending disposal of the appeal, and whether the petitioner had sufficiently secured the disputed tax to protect the revenue.

Analysis: The writ petition challenged refusal to extend interim stay in respect of an assessment under the Tamil Nadu Value Added Tax Act, 2006. The Court noted that the petitioner had already paid 25% of the disputed tax and furnished a bank guarantee for the balance, thereby securing the revenue. In these circumstances, refusal to continue the stay was found unjustified. The Court directed the appellate authority to dispose of the appeal on merits and in accordance with law, and ordered that the interim stay would continue until the appeal was decided, subject to the bank guarantee being kept alive.

Conclusion: The extension of interim stay was granted and the writ petition succeeded to that extent.

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