Stay of recovery during pending VAT appeal protects the appellate remedy where coercive collection would make the appeal ineffective.

Where a statutory VAT appeal is pending, recovery of the remaining disputed demand may be stayed if coercive collection would render the appeal ineffective. The petitioner had already deposited two-thirds of the disputed tax, and the Telangana HC considered protection under Section 31(3)(c) of the A.P. VAT Act, 2005 appropriate to preserve the efficacy of the appellate remedy before the Tribunal. Recovery of the balance disputed tax was therefore stayed until disposal of the appeal, while the merits of the tax dispute were left for the appellate forum to decide.

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Issues: Whether recovery of the balance disputed tax should be stayed pending disposal of the appeal before the VAT Appellate Tribunal.

Analysis: The petitioner had already deposited two-thirds of the disputed tax. The statutory appeal before the Tribunal was still pending. If the remaining demand were recovered during the pendency of that appeal, the appeal would be rendered infructuous. In these circumstances, relief under Section 31(3)(c) of the A.P. VAT Act, 2005 was considered appropriate to protect the efficacy of the pending appellate remedy.

Conclusion: Recovery of the balance disputed tax was stayed pending disposal of the appeal before the Tribunal, in favour of the assessee.

Final Conclusion: The writ petition succeeded to the extent of protection against coercive recovery during pendency of the statutory appeal, while leaving the merits of the tax dispute to be decided by the appellate tribunal.

Ratio Decidendi: Where a statutory appeal is pending and recovery of the balance demand would render that appeal ineffective, the court may stay recovery to preserve the appellate remedy.

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