Pre-deposit waiver and stay in tax appeal without weighing prima facie merits; order set aside for fresh decision

The dominant issue was whether the appellate authority validly granted stay/dispensation of pre-deposit without assessing prima facie merits. The SC held that the authority's reasoning was unsatisfactory because it focused only on balance of convenience and failed to apply its mind to the prima facie merits; it was required to first form a prima facie view on the appellant's case and then fix the quantum of deposit by considering financial hardship and other relevant factors. Consequently, the impugned order was set aside and the matter was remitted for fresh determination of pre-deposit/stay, resulting in relief to the assessee.

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The Supreme Court set aside the order of the Commissioner (Appeals) directing appellants to deposit Rs. 30 lakhs under Section 35F of the Central Excise Act, 1944. The Court found the reasoning unsatisfactory and remanded the matter back to the appellate authority for redetermination, emphasizing consideration of prima facie merits and relevant factors. The appeal was allowed without costs.

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