Stay condition on disputed tax held arbitrary where prior pre-deposit existed and appeal was already pending.

A stay condition requiring payment of 50% of the disputed tax was found harsh, unreasonable, arbitrary and illegal where the taxpayer had already filed a statutory appeal and made a 25% pre-deposit. The dispute was linked to earlier advance rulings under the Telangana Value Added Tax Act, 2005, on the basis of which the goods had been treated as taxable at 5%. In those circumstances, the High Court interfered with the stay condition and granted interim protection against collection of the disputed tax pending disposal of the appeal.

---

---

Issues: Whether the condition requiring payment of 50% of the disputed tax for stay of collection was arbitrary and liable to be set aside, and whether interim protection ought to be granted pending disposal of the statutory appeal.

Analysis: The petitioner had already preferred an appeal against the revision order and had deposited 25% of the disputed tax as pre-deposit. The assessment dispute was linked to earlier advance rulings under the Telangana Value Added Tax Act, 2005, on the basis of which the petitioner had been treating the goods as taxable at 5%. In that context, insisting upon payment of a further 50% of the disputed tax for grant of stay was found to be harsh and unreasonable. The order was therefore viewed as arbitrary and illegal, warranting interference.

Conclusion: The condition imposed for stay was set aside and stay of collection of the disputed tax was granted during pendency of the appeal, in view of the pre-deposit already made.

---