Pre-deposit orders and conditional stay should not be disturbed unless jurisdictional error or grave injustice is shown.

Interference with an interlocutory pre-deposit and conditional stay order was held to be unwarranted where the Commissioner (Appeals) exercised appellate discretion. Challenges based on the prospective or retrospective operation of the notification and limitation were treated as merits issues, not matters for final determination at the pre-deposit stage. The court reiterated that extraordinary jurisdiction is justified only when the impugned order is without jurisdiction or is so exceptional as to shock the conscience, which was not shown. The deposit amount was also viewed in light of the assessed service tax, interest and penalty. The request to replace the deposit with a bank guarantee was left open before the appellate authority.

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Issues: Whether the High Court should interfere with an interlocutory order of the Commissioner (Appeals) directing pre-deposit and granting conditional stay.

Analysis: The order under challenge was an interim order passed in the exercise of appellate discretion. The objections raised against it, including the prospective or retrospective operation of the notification and the plea of limitation, were matters going to the merits of the appeal and were not fit to be conclusively determined at the pre-deposit stage. Interference under extraordinary jurisdiction was held to be warranted only where the order was without jurisdiction or of such a nature as to shock the conscience of the Court, which was not the position here. The amount directed to be deposited was also considered in the context of the assessed service tax, interest and penalty, and no case was found for interference. The request to substitute the deposit with a bank guarantee was left open to be raised before the Commissioner (Appeals).

Conclusion: The Court declined to interfere with the pre-deposit order and upheld the rejection of the petition.

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