Reduced pre-deposit in stay applications may follow a strong prima facie exemption and limitation case with demonstrated hardship.

A stay application may justify reduced pre-deposit where the assessee shows a strong prima facie challenge on limitation and exemption, and demonstrates financial hardship. The dispute concerned claimed exemption for electronic voting machines and sub-assemblies, with the applicants also disputing extended limitation and alleging no suppression. The majority considered these grounds sufficient for interim protection, while one member favoured a higher deposit; the final view granted partial relief on specified conditions. The balance of duty and penalty was waived on compliance with the ordered cash deposit and bank guarantee.

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Issues: Whether the applicants were entitled to waiver of the major portion of pre-deposit and stay of recovery in the appeal, having regard to the prima facie case, plea of limitation, claimed exemption, and financial hardship.

Analysis: The order turned on a preliminary assessment of the demand, the applicability of the exemption claimed in relation to electronic voting machines and their sub-assemblies, the alleged absence of suppression, and the applicants' financial position. The majority accepted that the plea against extended limitation had force, that the exemption issue raised a substantial prima facie question, and that hardship would result if the full demand were insisted upon. While one member took the contrary view and required a higher pre-deposit, the third member concurred with the view that the applicants had made out sufficient grounds for interim relief on the terms fixed by the Judicial Member.

Conclusion: The stay petition was allowed in part, with the applicants directed to deposit Rs. 2 lakhs in cash and furnish a bank guarantee for Rs. 5 lakhs within eight weeks, and the balance of duty and penalty stood waived on compliance.

Ratio Decidendi: In a stay application, interim relief may be granted on a reduced pre-deposit where the assessee raises a substantial prima facie issue and shows comparative hardship, even if the Revenue disputes exemption and limitation.

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