In a significant relief to taxpayers, the Supreme Court of India has upheld a crucial protection under the GST appellate process, ruling that once a taxpayer has made the mandatory 10% pre-deposit for filing an appeal, the tax authorities cannot continue recovery proceedings or attach the taxpayer’s bank accounts. This ruling reinforces the principle that recovery measures should remain suspended while an appeal is pending and the statutory pre-deposit condition is satisfied.
Case Title:
Deputy Commissioner of State Tax vs. Wingtech Mobile Communications (India) Pvt. Ltd.
Court:
Supreme Court of India
Bench:
Justice B.V. Nagarathna and Justice Augustine George Masih
Date of Judgment:
October 2025
Background:
Wingtech Mobile Communications (India) Pvt. Ltd., a registered GST taxpayer, faced a tax demand order issued by the State GST authorities. In accordance with Section 107(6) of the CGST Act, 2017, the company filed an appeal before the appellate authority after depositing 10% of the disputed tax amount as a pre-deposit.
However, despite the pre-deposit and pendency of the appeal, the department proceeded to attach the company’s bank accounts and restrain withdrawals, effectively freezing its operations.
Aggrieved, the company approached the High Court, which held that once the statutory pre-deposit is made, the department cannot enforce recovery or continue coercive measures during the appeal. The State Tax Department challenged this ruling before the Supreme Court.
Issues Before the Supreme Court:
- Whether the GST department can continue recovery or maintain attachment of bank accounts after the assessee has made the 10% pre-deposit for appeal under Section 107(6) of the CGST Act.
- Whether the High Court erred in interfering with departmental action when recovery proceedings were initiated before the appeal.
Supreme Court’s Observations:
- The Court emphasized that the statutory scheme of the GST Act provides a clear mechanism to balance revenue interests and taxpayer rights.
- Section 107(6) mandates a 10% pre-deposit of the disputed tax as a condition for appeal, and Section 107(7) explicitly states that recovery of the remaining amount shall be stayed during pendency of the appeal.
- Therefore, any coercive recovery or bank attachment after the deposit violates the statutory protection provided to the appellant.
- The purpose of the pre-deposit requirement is to safeguard revenue interests while granting temporary immunity to the taxpayer until the appeal is adjudicated.
Judgment:
The Supreme Court dismissed the department’s appeal, upholding the High Court’s ruling. It affirmed that:
“Once the taxpayer has complied with the pre-deposit requirement for filing an appeal under Section 107(6), the tax authorities are barred from taking any recovery action or continuing with bank account attachment in respect of the balance disputed amount.”
The Court further clarified that attachment orders should be immediately lifted once the pre-deposit is made and an appeal is admitted.
Key Takeaways:
- Taxpayers enjoy statutory protection from recovery after making the 10% pre-deposit for GST appeals.
- Departments cannot attach or freeze bank accounts post-deposit.
- The ruling provides clarity and consistency in applying the stay provision under Section 107(7) of the CGST Act.
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This judgment strengthens the appellate safeguards against arbitrary coercive measures by tax authorities.