Pre-deposit in tax appeals requires assessment of prima facie case and financial hardship before any deposit condition is imposed.

In considering interim relief in a tax appeal, the authority must assess the assessee's prima facie case and claimed financial hardship before imposing any pre-deposit condition. The Court found that the appellate authority and Tribunal had not meaningfully examined those factors before directing deposit of part of the disputed tax. A mechanical insistence on pre-deposit was therefore improper. The deposit condition was set aside, and the appeal was to be decided without insisting on pre-deposit.

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Issues: Whether, while deciding a stay application in a tax appeal, the appellate authority and the Tribunal were required to consider the assessee's prima facie case and financial hardship before directing deposit of part of the disputed tax.

Analysis: The revision arose from an order directing deposit of 10% of the disputed tax despite the assessee's plea of a strong prima facie case and financial difficulty. The Court found that neither the appellate authority nor the Tribunal had meaningfully considered those relevant factors before fixing the deposit condition. A mechanical insistence on pre-deposit, without examining the merits and hardship pleaded, was held to be improper in the circumstances of the case.

Conclusion: The requirement to deposit 10% of the disputed tax was set aside, and the appellate authority was directed to decide the appeal without insisting on pre-deposit. The issue was answered in favour of the assessee and against the Department.

Ratio Decidendi: In considering interim relief in a tax appeal, the authority must apply its mind to the assessee's prima facie case and financial hardship before imposing any pre-deposit condition.

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