Reasoned pre-deposit discretion is mandatory; mechanical refusal without relevant factors or reasons invalidates the resulting appeal dismissal.

An order refusing stay and dispensation of pre-deposit under section 35F must be based on relevant materials and an objective exercise of discretion, with reasons showing consideration of the prima facie case, the parties' conduct and undue hardship. A mechanical refusal without such reasoning amounts to non-application of mind and is invalid. The consequent dismissal of the appeal could not be sustained, and the matter was remanded to the Commissioner (Appeals) for fresh consideration and a speaking order.

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Issues: Whether the Commissioner (Appeals) could reject the stay and pre-deposit application under section 35F without recording reasons or considering the relevant factors, and whether the resulting dismissal of the appeal could stand.

Analysis: The order refusing dispensation of pre-deposit was required to be made on relevant materials and by an objective exercise of discretion, keeping in view the prima facie case, conduct of the parties, and any undue hardship. A mechanical order that discloses no consideration of these matters amounts to non-application of mind and is vitiated. Since the appeal had been dismissed as a consequence of that defective order, the appellate process also could not be sustained in its present form.

Conclusion: The order rejecting the stay and pre-deposit application was held to be bad, the consequent dismissal of the appeal could not stand, and the matter was remanded to the Commissioner (Appeals) for fresh consideration and a speaking order.

Ratio Decidendi: An order on pre-deposit or stay must reflect a reasoned, objective exercise of statutory discretion on relevant factors, and a mechanical refusal without reasons is liable to be set aside.

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