Pendency of constitutional challenge does not automatically stay tax recovery; partial stay orders remain discretionary and reviewable.

Pendency of a constitutional challenge to the entry tax enactment did not, by itself, require complete stay of tax recovery, because no stay of recovery had been granted and the authority retained discretion over interim relief. Reliance on Section 53(8) of the Uttarakhand Value Added Tax Act, 2005 was permissible at the second appellate stage, as the legality of the partial stay order was under scrutiny within the appellate framework. The direction to deposit 40% of the demand was also upheld, the plea of financial hardship being insufficient to displace the discretionary assessment made by the appellate authorities.

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Issues: (i) whether the pendency of a challenge to the constitutional validity of the entry tax enactment required complete stay of the tax demand, (ii) whether reliance on Section 53(8) of the Uttarakhand Value Added Tax Act, 2005 was impermissible at the stage of second appeal, and (iii) whether the direction to deposit 40% of the demand could be interfered with on grounds of financial hardship.

Issue (i): whether the pendency of a challenge to the constitutional validity of the entry tax enactment required complete stay of the tax demand.

Analysis: Pendency of a constitutional validity challenge did not, by itself, create a bar on assessment or recovery. No stay of recovery had been granted in the pending challenge, and the authority dealing with the stay application retained discretion to decide the extent of relief. The existence of sub judice proceedings did not compel a 100% stay of demand.

Conclusion: The contention was rejected and complete stay was not warranted.

Issue (ii): whether reliance on Section 53(8) of the Uttarakhand Value Added Tax Act, 2005 was impermissible at the stage of second appeal.

Analysis: The controversy before the appellate authority concerned the legality of the partial stay order passed in appeal. At that stage, the appellate framework under Section 53 was already applicable, and the provision could validly be relied upon while examining the stay direction. The objection that the provision had no application was unsustainable.

Conclusion: The objection was rejected and the reliance on Section 53(8) was upheld.

Issue (iii): whether the direction to deposit 40% of the demand could be interfered with on grounds of financial hardship.

Analysis: The amount directed to be deposited was not shown to be beyond the revisionist's capacity in a manner warranting judicial interference. The Court treated the plea of financial distress as insufficient to displace the discretionary determination already made by the appellate authorities.

Conclusion: The direction to deposit 40% of the demand was upheld.

Final Conclusion: The challenge to the partial stay order failed, and the discretionary order of the appellate authorities was left undisturbed.

Ratio Decidendi: Pendency of a constitutional challenge does not automatically stay tax recovery, and a partial stay of demand granted in the exercise of statutory discretion will not be interfered with absent legal infirmity.

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