Pre-deposit relief on financial hardship: Tribunal accepted a bank guarantee in place of immediate cash deposit during appeal.

In stay proceedings, a pre-deposit direction may be modified where financial hardship is credibly shown, and a bank guarantee can be accepted as a substitute for immediate cash deposit. Here, the Tribunal observed that the plea of financial weakness was raised at the modification stage and should ideally have been supported earlier, but it nonetheless took a compassionate view of the assessee's condition. It therefore modified the earlier direction, allowed furnishing of a bank guarantee, and stayed recovery during the pendency of the appeal, subject to compliance with the guarantee requirement within the stipulated time.

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Issues: Whether the pre-deposit directed in the stay proceedings should be modified on account of financial hardship, and whether furnishing a bank guarantee could substitute the cash deposit while staying recovery during the pendency of the appeal.

Analysis: The Tribunal noted that the plea of financial weakness was raised at the stage of modification and that the material supporting such plea ought to have been placed earlier. Taking a compassionate view of the assessee's stated financial condition, the Tribunal modified the earlier direction and accepted a bank guarantee in place of immediate cash payment.

Outcome: The assessee was permitted to furnish a bank guarantee for Rs. 1 lakh within four weeks, and on such compliance the remaining duty and penalty were waived for deposit and recovery was stayed during the pendency of the appeal.

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