Limitation-based stay of recovery granted where assessment appeared time-barred and pre-deposit condition was set aside.

An interim stay on recovery was examined where the assessee contended that the assessment was barred by limitation under the Kerala Value Added Tax Act, 2003. The assessment had been made after an audit objection under Section 25A, but the limitation question under Section 25(1), which prescribes a six-year period from the end of the relevant assessment year, was already pending judicial consideration. As the assessment was prima facie beyond that period, the court found a strong case for stay. The condition requiring pre-deposit of 25% of the assessed dues was set aside, and recovery of the disputed demand was kept in abeyance pending disposal of the writ petition.

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Issues: Whether the interim direction requiring deposit of 25% of the assessed tax as a condition for stay of recovery was justified when the assessment was alleged to be time-barred under the Kerala Value Added Tax Act, 2003.

Analysis: The assessment was challenged on the ground that it had been completed beyond the limitation period. The assessment had been made pursuant to an audit objection under Section 25A of the Kerala Value Added Tax Act, 2003, but the question whether such an audit objection could override the limitation prescribed under Section 25(1) was already pending consideration before the Court. Since Section 25(1) fixes a six-year period from the end of the relevant assessment year, and the assessment in question was stated to have been made beyond that period, a prima facie case for stay was made out.

Conclusion: The condition requiring pre-deposit of 25% of the assessed dues was unsustainable and was set aside, and recovery of the amounts covered by the assessment was kept in abeyance pending disposal of the writ petition.

Ratio Decidendi: Where the validity of an assessment is prima facie vitiated by limitation and the limitation question is already under judicial consideration, a stay of recovery may be granted without insisting on a substantial pre-deposit as a condition precedent.

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