Pre-deposit waiver under Section 35F must be decided first; coercive recovery should wait until the appellate authority acts.

When a statutory appeal is accompanied by an application for waiver of pre-deposit on grounds of undue hardship, the appellate authority must decide that request promptly under the proviso to Section 35F. Pending such decision, coercive recovery of the disputed demand should not proceed, because doing so would defeat the statutory safeguard built into the proviso and undermine the appellant's opportunity to seek dispensation from deposit. The court therefore protected the appellant from recovery until the application was decided and directed timely disposal of the waiver request.

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Issues: (i) whether the appellate authority was bound to decide the application for dispensing with pre-deposit under the proviso to Section 35F before coercive recovery of the disputed demand could be pursued; and (ii) whether recovery of the disputed amount should remain stayed until that application was decided.

Issue (i): Whether the appellate authority was bound to decide the application for dispensing with pre-deposit under the proviso to Section 35F before coercive recovery of the disputed demand could be pursued.

Analysis: Section 35F makes deposit of duty or penalty a condition for appeal, but its proviso confers discretion on the appellate authority to dispense with such deposit where undue hardship is shown. Once such an application is filed, the authority is required to exercise that discretion and pass an appropriate order. Failure to do so, while permitting recovery of the disputed dues, would frustrate the statutory safeguard intended by the proviso and deprive the appellant of the right to seek waiver of pre-deposit.

Conclusion: The application had to be decided by the appellate authority, and inaction could not justify coercive recovery of the disputed demand meanwhile.

Issue (ii): Whether recovery of the disputed amount should remain stayed until that application was decided.

Analysis: Since the waiver application was pending and coercive recovery steps had been threatened, equity and the interest of justice required protection of the appellant's position until the appellate authority acted on the request. The Court therefore directed disposal of the application within a fixed time and protected the appellant against recovery in the interregnum.

Conclusion: Recovery of the disputed amount was stayed until the appellate authority decided the application.

Final Conclusion: The writ petition succeeded to the extent of securing a prompt decision on the pre-deposit waiver application and protection against recovery until that decision.

Ratio Decidendi: When a statutory appeal is accompanied by a pending application for waiver of pre-deposit on grounds of undue hardship, the appellate authority must exercise its discretion promptly, and coercive recovery of the disputed demand should not proceed before that application is decided.

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