Pending appeal and stay application bar coercive recovery that overreaches the appellate process.

Where a statutory appeal and stay application against an assessment order are duly filed and remain pending consideration, coercive recovery of the disputed demand should ordinarily be deferred. The Gujarat HC held that issuing a recovery notice for the full assessed demand before the appellate authority had heard the appeal and stay request amounted to overreaching the appellate process and was not a reasonable exercise of recovery power. The recovery notice was therefore unsustainable and was quashed in favour of the assessee.

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Issues: Whether recovery proceedings could be initiated against the assessee during the pendency of its statutory appeal and stay application against the assessment order.

Analysis: The assessee had filed the appeal and stay application within the prescribed period, and the appellate authority had not yet heard them. The recovery notice was issued shortly thereafter for the full assessed demand. In these circumstances, and in light of the earlier order of the Court lifting the bank attachment while the appeal process was contemplated, the authorities ought to have deferred coercive recovery until the appeal and stay request were considered. The action was found to be an overreaching of the legal process and not a reasonable exercise of the recovery power.

Conclusion: The recovery notice could not be sustained and was liable to be quashed; the issue was decided in favour of the assessee.

Ratio Decidendi: Where a statutory appeal and stay application are duly filed and remain pending consideration, coercive recovery of the disputed demand should ordinarily be deferred and cannot be undertaken in a manner that overreaches the appellate process.

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