No attachment of bank account/ restraining funds of taxpayers after 10% pre-deposit payment for appeal filed.

The Hon’ble Supreme Court in the case of Deputy Commissioner ST & Ors. v. Wingtech Mobile Communications India Pvt. Ltd. [2025 (10) TMI 604 - SC Order] held that the Revenue cannot continue to attach or restrain a taxpayer’s bank accounts under the GST Act once the appellate pre-deposit has been made, thus upholding the Andhra Pradesh High Court’s judgment granting relief to the assessee.​

Facts:

The Deputy Commissioner ST and others (“the Petitioners”) are Revenue authorities who had attached the bank accounts of the assessee. Wingtech Mobile Communications India Pvt. Ltd. (“the Respondent”) is the assessee whose accounts were attached after a GST assessment order. The Respondent contended that after making a mandatory 10% pre-deposit under Section 107(6) of the CGST Act for filing an appeal, continued attachment of their bank accounts was unlawful.

The Petitioners contended that attachment could continue to secure the remainder of the allegedly due amount, despite the pre-deposit. Aggrieved by continued attachment, the Respondent (assessee) challenged the action before the Andhra Pradesh High Court via writ petition (WP No. 22461/2025) - 2025 (9) TMI 1328 - ANDHRA PRADESH HIGH COURT, seeking release of the bank accounts.​

Issue:

Whether the Revenue is entitled to continue attaching or restraining an assessee’s bank accounts for the balance demand after the assessee has deposited the 10% pre-deposit required to file a GST appeal under Section 107.

Held:

The Hon’ble Supreme Court in 2025 (10) TMI 604 - SC Orderheld as under:

• Observed that, the Andhra Pradesh High Court had already granted relief by permitting the assessee to operate its bank accounts, noting that pre-deposit had been made and some amounts had already been recovered.
• Noted that, after the mandatory pre-deposit under Section 107(6), the law does not authorise continued attachment for the disputed amount.
• Held that, the assessee's undertaking to preserve the amount in the bank pending further proceedings, consistent with the High Court’s order and dismissed the Special Leave Petition by stating no grounds for interference with the High Court’s judgment, and disposed of all pending applications.​

Our Comments:

The Supreme Court's ruling is in line with Section 107(6) and (7) of the CGST Act, which together provide statutory protection for assessees who make the mandatory appellate pre-deposit. The law contemplates suspension of recovery measures for the balance, pending appeal. The Telangana High Court in Wingtech Mobile Communications (India) Pvt. Ltd. vs. Deputy Commissioner & Ors. [2025 (9) TMI 1328 - ANDHRA PRADESH HIGH COURT]had held that there is no any provision which would permit a course of action once a deemed stay comes into play, under the provisions of Section 107

Relevant Provisions:

Section 107(6), 107(7) of the CGST Act, 2017:

107. Appeals to Appellate Authority.-

(6) No appeal shall be filed under sub-section (1), unless the appellant has paid-

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed.

Provided that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to ten per cent. of the said penalty has been paid by the appellant.

(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.”

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