Interim stay of tax recovery granted subject to time bound deposit calibrated to appeal pursuit norms and protecting revenue.

Petitioner challenged a notification and sought ad interim protection against tax recovery; court balanced appellate uncertainty and revenue interest by applying the principle that interim stay may be granted subject to a calibrated security for pursuit of appeal. The court noted a prior High Court struck down the notification and a pending Supreme Court petition without stay, and a rectification reduced the demand; consequently HC granted a conditional stay of recovery on deposit of Rs. 2.10 Crores within six weeks, failing which the relief will be vacated.

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Issues: Whether ad interim relief in the form of stay of recovery of tax/demand should be granted to the petitioner subject to deposit of a specified amount.

Analysis: The petition challenges a notification relied upon in the impugned order and notes that the same notification has been struck down by another High Court with a petition pending before the Supreme Court where no stay has been granted. The tax demand originally in the range of Rs. 24 Crores was reduced after rectification to approximately Rs. 21 Crores. The petitioner sought interim protection anticipating uncertainty about the appellate authority striking down the notification. In the circumstances, conditional interim relief by way of stay of recovery was considered appropriate, calibrated to the quantum ordinarily required for pursuing an appeal (10 percent of the present demand) and made subject to a time-bound deposit to balance equities and protect revenue interests.

Conclusion: Ad interim relief granted in favour of the petitioner subject to deposit of Rs. 2.10 Crores within six weeks, failing which the ad interim relief shall stand vacated.

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