Stay of tax recovery pending appeal may be granted when statutory pre-deposit is already made and further deposit is ordered.

The Telangana High Court noted that Section 31(1) of the TVAT Act requires a dealer to pre-deposit 12.5% of the disputed tax for appeal admission, while Section 31(3) empowers the appellate authority to stay recovery of the balance demand on suitable security or further payment. The court treated the stay power as incidental to appellate and revisional jurisdiction and requiring fair, judicious exercise. As the dealer had already made the statutory pre-deposit, outright refusal of stay was considered unwarranted. Stay of recovery was therefore granted subject to a further deposit of 12.5% of the disputed tax within 30 days, after which coercive recovery would remain stayed until disposal of the appeal.

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Issues: Whether the appellate and revisional authorities were justified in rejecting the petitioner's request for stay of recovery pending disposal of the appeal, and whether the court should grant stay subject to further deposit.

Analysis: Section 31(1) of the Telangana Value Added Tax Act, 2005 requires a dealer to deposit 121/2% of the disputed tax for admission of the appeal. Section 31(3) enables the appellate authority to stay recovery of the balance disputed demand on such security or further payment as may be specified, and a revision lies against refusal of stay. The power to grant stay is incidental and ancillary to the appellate and revisional jurisdiction and must be exercised fairly and judiciously by balancing the interests of both sides. Since the petitioner had already deposited 121/2% for admission of the appeal, outright refusal of stay was found unwarranted.

Conclusion: The rejection of stay was set aside in effect, and stay of recovery was granted on the condition that the petitioner deposits a further 121/2% of the disputed tax within 30 days; upon such deposit, coercive recovery of the assessed demand will remain stayed till disposal of the appeal.

Ratio Decidendi: The power to stay recovery pending appeal under the TVAT Act is an ancillary discretionary power that must be exercised reasonably and may be granted when the assessee has already made the statutory pre-deposit and offers further deposit as a condition for protection against coercive recovery.

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