Stay on disputed tax demand cannot be tied to an additional bank guarantee where clause (i) alone applies.

Under Section 62(4)(c)(i) of the Karnataka Value Added Tax Act, stay of 70% of the disputed demand follows payment of 30% with the appeal, and that clause does not expressly empower the appellate authority to insist on an irrevocable bank guarantee for the balance. The security requirement was sought to be justified through Section 62(4)(c)(ii), but that deeming provision applies only where the stay application is not disposed of within thirty days and deemed stay arises. Because the application had been considered within time, clause (i) governed and the additional guarantee condition was unsustainable and set aside.

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Issues: Whether, while granting stay under Section 62(4)(c)(i) of the Karnataka Value Added Tax Act, 2003 on payment of 30% of the disputed demand, the appellate authority can additionally insist on furnishing an irrevocable bank guarantee for the balance amount.

Analysis: Section 62(4)(c)(i) contemplates stay of 70% of the tax and other amount on payment of the balance 30% along with the appeal. The provision relied on for imposing security is the deeming provision in Section 62(4)(c)(ii), but that operates where an application remains undisposed of for thirty days and a deemed stay comes into existence. As the application in this case had been considered within time, the matter fell under clause (i), which does not expressly authorise the appellate authority to demand bank guarantee or other security for the remaining amount.

Conclusion: The condition requiring the petitioner to furnish an irrevocable bank guarantee was not sustainable and was set aside.

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