No Fund Attachment Once 10% Pre-Deposit Made u/s 107 of GST Act: Supreme Court Upholds Andhra Pradesh HC Order [Read Order]

In a recent ruling, the Supreme Court upheld the Andhra Pradesh High Court’s decision holding that once a taxpayer deposits 10% of the disputed tax while filing an appeal under Section 107 of the GSTAct, tax authorities cannot attach or restrain the assessee’s funds.

Wingtech Mobile Communications had challenged a recovery notice issued by the Deputy Commissioner of State Tax, Tirupati, under Section 79(1)(c) of the APGST Act. The recovery notice sought to recover Rs. 244.63 crore, and a sum of Rs. 170 crore was debited from the company’s HSBC Bank account following provisional attachment orders issued in July 2025.

The petitioner's counsel argued that the recovery proceedings were illegal because they were initiated before the expiry of the statutory period for filing an appeal and before the petitioner could deposit the 10% pre-deposit required under Section 107(6) of the APGST Act.

They further argued that once 10% of the disputed amount is deposited, a deemed stay on recovery applies, and the department has no authority to retain or further restrain the funds.

The Andhra Pradesh High Court Bench comprising Justice R. Raghunandan Rao and Justice T.C.D. Sekhar observed that there was no provision under Section 107 permitting the authorities to keep the taxpayer’s funds under restraint once the pre-deposit requirement was met.

The court also explained that the department’s insistence on maintaining additional funds in the bank account was impermissible in law. At the same time, to safeguard the revenue’s interest, the court directed the petitioner to give an undertaking that the refunded amount would be retained in its bank account until the appeal was decided.

The writ petition was disposed of with directions for refund of the recovered amount after retaining the 10% pre-deposit and for maintaining a minimum balance in the petitioner’s account until the conclusion of the appellate proceedings.

When the Revenue Department challenged this judgment, the Supreme Court Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar dismissed the Special Leave Petition and recorded the assessee’s undertaking to keep the deposited amount unaltered.

By refusing to interfere, the Supreme Court upheld the High Court’s interpretation of Section 107, confirming that no attachment of funds can be made once the statutory pre-deposit is paid.

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