No attachment of bank account after statutory pre-deposit of 10% of the disputed tax demand under Section 107 of the GST Act
Summary: The Andhra Pradesh High Court in Wingtech Mobile Communications India Pvt. Ltd. v. Deputy Commissioner & Ors. [W.P. No. 22461/2025, order dated September 3, 2025] held that once a taxpayer makes the statutory pre-deposit of 10% of the disputed tax under Section 107 of the CGST Act while filing an appeal, no further recovery or attachment of bank accounts can be made. The petitioner, Wingtech Mobile Communications India Pvt. Ltd., challenged a tax demand of ₹244.63 crores following an assessment order dated August 2, 2025. Despite this, the tax authorities provisionally attached its bank account on July 17, 2025, and later recovered ₹170 crores on August 19, 2025. The petitioner argued that under Section 107, payment of the 10% pre-deposit operates as a deemed stay on recovery, making such attachment and recovery actions unlawful. The respondents contended that their actions were within statutory authority. The Court observed that Section 107 creates an automatic stay upon payment of the prescribed pre-deposit and that there is no legal provision authorizing attachment or restraint of funds thereafter. Consequently, the Court directed the authorities to refund the amount recovered in excess of the 10% pre-deposit, subject to the petitioner furnishing an undertaking to retain the refunded amount and sale proceeds in its bank account until final disposal of the appeal, thus safeguarding the revenue’s interest. The ruling clarifies that recovery under Section 79 cannot override the statutory protection available under Section 107, emphasizing that tax authorities must adhere to the deemed stay mechanism once an appeal with the required pre-deposit is filed
Facts:
Wingtech Mobile Communications India Pvt. Ltd. (‘the Petitioner’) is a taxpayer who challenged an order of tax assessment dated August 2, 2025, demanding Rs. 244.63 crores as disputed GST. Following the assessment, the Deputy Commissioner (‘the Respondent’) issued a provisional attachment order dated July 17, 2025, attaching the Petitioner’s bank account, then a recovery notice dated August 19, 2025, leading to recovery of Rs. 170 crores from the bank account.
The Petitioner contended that by operation of Section 107 of the GST Act, the payment of 10% of the disputed tax demand should have triggered a deemed stay of recovery, making further attachment or recovery impermissible. The Respondent contended that the recovery and attachment were done within power and in accordance with law.
Aggrieved by the alleged illegal recovery and attachment, and the requirement to keep an unreasonably large sum as balance in the bank account, the Petitioner approached the High Court by way of a writ petition under Article 226 of the Constitution, seeking to quash the recovery notice, attachment, and to direct refund of excess amounts recovered.
Issue:
Whether the tax authorities can attach or restrain funds in the bank account of the Petitioner after the Petitioner has paid the statutory pre-deposit of 10% of the disputed GST demand under Section 107 of the CGST Act?
Held:
The Hon’ble Andhra Pradesh High Court in Writ Petition No. 22461/2025 held as under:
- Observed that, Section 107 of the CGST Act mandates a deemed stay on recovery proceedings once the statutory pre-deposit of 10% of disputed tax is made for filing an appeal.
- Noted that, there is no provision permitting attachment or restraint on funds after such pre-deposit payment and deemed stay.
- Directed the Respondents to release the money recovered in excess of the 10% pre-deposit, subject to the petitioner furnishing an undertaking to retain refunded amount and any sale proceeds in its bank account until disposal of the appeal to protect revenue interests.
Our Comments:
The judgment reinforces the principle under Section 107 of the CGST Act, 2017 that payment of the statutory pre-deposit creates a deemed stay and bars further recovery beyond that pre-deposit amount during the appeal process. The Court balanced the revenue’s interest by requiring undertakings from the Petitioner while ensuring that excessive funds are not unlawfully kept under attachment.
Relevant Provisions:
Section 107, CGST Act, 2017
“ (1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person. …”
Section 79, CGST Act, 2017
“79. Recovery of tax-
…(b) the proper officer may recover or may require any other specified officer to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the proper officer or such other specified officer;
(c) (i) the proper officer may, by a notice in writing, require any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the Government either forthwith upon the money becoming due or being held, or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount;…”
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