Stay of tax recovery deposit may be reduced where the 15% norm is not rigid and facts justify relief

The CBDT stay-of-demand norm prescribing a 15% deposit of the disputed tax demand is only a general guideline, not an inflexible rule, and the assessing authority and administrative Commissioner may vary it where the facts justify a different approach. Where the demand is high, the appeal is at the first appellate stage, and the additions appear arguable, insisting on the full deposit may be unduly onerous. On those facts, the deposit condition was modified and reduced to 7.5%, with immovable security required for the balance.

---

---

Issues: Whether the condition requiring deposit of 15% of the disputed tax demand as a pre-condition for stay of recovery pending appeal could be reduced in the facts of the case.

Analysis: The guidelines governing stay of demand under the CBDT instruction and the later office memorandum prescribe 15% of the disputed demand as a general norm, but they do not make that percentage an inflexible rule. The assessing authority and the administrative Commissioner retain discretion to vary the percentage where the nature of the addition or the facts justify a different approach. In the present case, the tax demand was very high, the appeals were at the first appellate stage, and the material disclosed that some additions were arguable while the assessee's objections could not be rejected outright. In these circumstances, maintaining the full 15% deposit requirement would be unduly onerous.

Conclusion: The condition was modified and the deposit requirement was reduced to 7.5%, subject to furnishing immovable security for the remaining 7.5%.

---