Pre-deposit exemption applications should be decided first, with recovery restrained until disposal of the stay request.

An assessee seeking dispensation of pre-deposit may legitimately expect the appellate authority to decide that application before coercive recovery is pursued, and recovery should not be enforced in the meantime. The High Court directed the appellate authority to dispose of the pending exemption and stay application within two months and restrained recovery of the disputed amount until that application is decided.

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Issues: Whether the application for dispensation of pre-deposit and stay pending before the appellate authority should be decided within a fixed time and whether recovery of the disputed amount should be restrained till such disposal.

Analysis: The petitioner complained that the appeal and the accompanying application for exemption from pre-deposit were not being decided, while recovery proceedings were being pursued coercively. The Court found that an assessee who seeks exemption from pre-deposit legitimately expects that the application be decided first, and that recovery should not be enforced before such decision. To address this grievance, the Court directed the appellate authority to dispose of the pending application within two months and restrained recovery until disposal of that application.

Outcome: The appellate authority was directed to decide the exemption and stay application within two months, and recovery of the disputed amount was stayed until disposal of that application.

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