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of <h1>Filing Appeal with Pre-Deposit under Section 107(7) CGST Act Automatically Stays Impugned Order and Attachment</h1> <h3>M/s MJ Bizcrafts LLP Versus Central Goods And Services Tax Delhi South Commissionerate</h3> M/s MJ Bizcrafts LLP Versus Central Goods And Services Tax Delhi South Commissionerate - TMI ISSUES: Whether provisional attachment of a bank account under the Central Goods and Services Tax Act, 2017 is sustainable once an appeal is filed and the prescribed pre-deposit is made under Section 107.Whether the filing of an appeal with the requisite pre-deposit under Section 107(6) results in an automatic stay of the impugned order and consequently affects the continuation of provisional attachment under Section 83.Whether the bank is obligated to defreeze and permit operation of the attached bank accounts and fixed deposit accounts upon such appeal and pre-deposit. RULINGS / HOLDINGS: 'Once an appeal is filed and pre-deposit is made, there is automatic stay of the impugned order' under Section 107(7) of the Central Goods and Services Tax Act, 2017, rendering the provisional attachment of the bank account unsustainable.The order of provisional attachment 'must cease to subsist' after the filing of the appeal with the prescribed pre-deposit as per statutory mandate and judicial precedent.The bank is directed to 'defreeze the current account(s) and the FD account(s)' and permit the petitioner to operate the accounts immediately upon compliance with the appeal and pre-deposit requirements. RATIONALE: The Court applied the statutory framework under Sections 107(6) and 107(7) of the Central Goods and Services Tax Act, 2017, which requires payment of the admitted tax in full and a ten percent pre-deposit of the disputed tax amount as a condition precedent to filing an appeal, and provides that recovery proceedings are deemed stayed upon such payment.Judicial precedents emphasize that 'the recovery proceedings for the balance amount shall be deemed to be stayed' upon compliance with Section 107(6), thus provisional attachment orders passed under Section 83 during pendency of proceedings must cease to operate once the appeal and pre-deposit requirements are fulfilled.The Court relied on authoritative judgments affirming that a running business cannot be prejudiced by complete attachment of bank accounts when an appeal with pre-deposit is pending, reinforcing the principle of automatic stay and protection of business continuity.
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