Financial Hardship Not Necessary for Stay of Demand

In considering whether a stay of demand should be granted, the Court is duty bound to consider not merely the issue of financial hardship if any, but also whether a strong prima facie raising a serious triable issue has been raised which would warrant a dispensation of deposit. That is a settled position in the jurisprudence of our revenue legislation. In CEAT Limited Vs. Union of India⁶, the Division Bench of this Court has held as follows :

“If the party has made out a strong prima facie case, that by itself would be a strong ground in the matter of exercise of discretion as calling on the party to deposit the amount which prima facie is not liable to deposit or which demand has no legs to stand upon, by itself would result in undue hardship of the party is called upon to deposit the amount.”

Where a strong prima facie case has been made out calling upon the Petitioner to deposit, would itself occasion undue hardship. Where the issue has raised a strong prima face case which requires serious consideration as in the present case, a requirement of predeposit would itself be a matter of hardship.

  HIGH COURT OF BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (LODG.) NO. 523 OF 2013

UTI Mutual Fund versus  Income Tax Officer   

Date of Pronouncement- 6 March 2013.

ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :