Stay of tax recovery during appeal requires cogent reasons; interim protection granted subject to further deposit.
When a statutory appeal is pending and the prescribed pre-deposit has already been made, recovery of the balance disputed tax should ordinarily remain stayed unless special reasons are recorded for refusing interim protection. The High Court found that the order rejecting stay did not contain cogent reasons, while the merits of the assessment remained for the appellate tribunal. It therefore set aside the refusal of stay and granted protection against recovery during the appeal, subject to an additional deposit of 25% of the disputed tax, taking the total deposit to 50%.
Issues: Whether rejection of the stay application pending disposal of the statutory appeal was justified and whether recovery of the balance disputed tax could be stayed on conditions.
Analysis: The appeal was pending before the appellate tribunal and the statutory pre-deposit for filing the appeal had been made. In such a situation, recovery of the balance demand ordinarily deserves to be stayed unless special reasons are recorded for refusing stay. The impugned order did not disclose cogent reasons for rejecting the stay application, and the question whether the assessment order could ultimately be sustained was a matter for the appellate tribunal on merits. The statutory framework also contemplated grant of stay subject to conditions under Section 33(b) of the Andhra Pradesh Value Added Tax Act, 2005.
Conclusion: The rejection of the stay application was held unjustified, the impugned order was set aside, and stay of recovery was granted subject to further deposit of 25% of the disputed tax so that the total deposit became 50% during pendency of the appeal.
Final Conclusion: The writ petition succeeded to the extent of setting aside the refusal of stay and securing interim protection against recovery during the appeal, subject to an additional monetary condition.
Ratio Decidendi: When a statutory appeal is pending and the prescribed pre-deposit has been made, recovery of the balance demand should ordinarily remain stayed unless special reasons are recorded, and any refusal of stay must be supported by cogent reasons; stay may be granted subject to conditions.
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