GST Dept Cannot Attach Bank Accounts or Restrain Funds Once 10% Pre-Deposit for Appeal is Paid: Supreme Court [Read Judgement]
The Supreme Court ruled that the GST Department cannot attach bank accounts or restrain funds once a taxpayer has paid the 10% pre-deposit required for filing an appeal
Supreme Court, Bank Accounts, GST Dept
Supreme Court, Bank Accounts, GST Dept
In a recent ruling, the Supreme Court held that the Goods and Services Tax (GST) Department cannot attach a taxpayer’s bank accounts or restrain funds once the statutory pre-deposit of 10 percent of the disputed tax has been made for filing an appeal.
The case arose from a special leave petition filed by the Deputy Commissioner of State Tax and others against the judgment of the Andhra Pradesh High Court dated 3 September 2025 in Wingtech Mobile Communications (India) Pvt. Ltd. v. Deputy Commissioner of State Tax & Ors..
The High Court had set aside recovery and attachment orders issued against Wingtech Mobile Communications under the Andhra Pradesh Goods and Services Tax Act, 2017.
Wingtech Mobile Communications had been served with an assessment order on 2 August 2025 demanding Rs. 244.63 crores. Before the expiry of the appeal period, the authorities issued a provisional attachment order on 17 July 2025 and a recovery notice on 19 August 2025, under which Rs. 170 crores was withdrawn from the company’s bank account.
The petitioner’s counsel argued that the recovery was premature and without jurisdiction because under Section 107(6) of the APGST Act, once 10 percent of the disputed tax is paid as pre-deposit, recovery proceedings are automatically stayed. The counsel also argued that the department’s direction to maintain a balance of Rs. 130 crores from the sale proceeds of its assets was arbitrary and unsupported by law.
The state’s counsel argued that the refund was withheld because the petitioner had not furnished an undertaking to keep the funds within India. The department maintained that the condition requiring Wingtech to retain Rs. 130 crores in its account was imposed to protect revenue interests.
The Division Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar observed that no provision in the APGST Act allowed authorities to continue restraining a taxpayer’s funds once the statutory pre-deposit was made. The court explained that under Section 107(6), payment of 10 percent of the disputed tax creates a deemed stay on recovery.
The court also pointed out that the petitioner’s willingness to give an undertaking not to move the funds outside India adequately protected the department’s interest, making the condition to maintain Rs. 130 crores unnecessary and legally unsustainable.
The High Court directed that the excess amount recovered from Wingtech’s bank account be refunded after retaining 10 percent of the disputed tax as pre-deposit. It also required the company to file an undertaking to maintain the refunded amount and future sale proceeds in its bank account until the disposal of the appeal.
When the matter reached the Supreme Court, the Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar observed that there was no reason to interfere with the High Court’s order.
The court recorded the statement of Wingtech’s counsel that the undertaking directed by the High Court would be furnished and that the amount deposited in the bank would remain unchanged. With these observations, the special leave petition was disposed of.
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