Bank Account Cannot be Attached After 10% Pre-Deposit: Supreme Court Upheld High Court’s Order

The Supreme Court has recently upheld the decision of the Andhra Pradesh High Court, saying that the GST department cannot continue to attach the assessee’s bank account if the assessee has made the mandatory 10% pre-deposit, which is required to file an appeal under the GST law.

The petitioner, Wingtech Mobile Communications, was issued a notice dated 17.07.2025 to attach their bank account. The revenue had also issued an assessment order to the petitioner dated 02.08.2025, demanding Rs 244,63,28,470. Then, on 19.08.2025, a recovery notice was issued, and Rs 170 crores were paid from Wingtech’s bank account. The petitioner claimed that they could not file an appeal, as the whole amount available to the petitioner was paid to the revenue. Therefore, it filed a writ petition before the Andhra Pradesh High Court.

In the writ petition, the petitioner requested the court to:

• declare that the recovery before the expiry of 90 days is illegal and invalid under Section 107(6) of the APGST Act.
• retain only 10% of the disputed tax demand and allow the petitioner to adjust it for the statutory pre-deposit and refund the rest of the amount to the petitioner.
• Set aside the bank attachment order, as it was illegal, unconstitutional, and arbitrary.

The Andhra Pradesh High Court allowed the petitioner to file an appeal against the assessment order, directing that the 10% pre-deposit payment requirement had already been fulfilled by the petitioner by adjusting an amount of Rs 24.4 crores from the sum of Rs 170 crores, which was earlier recovered from the petitioner. The court also directed the tax authority to lift the bank attachments so that the petitioner can operate its bank account.

The tax department had revoked the attachment orders along with the recovery order, but imposed the following key conditions:

• The attachment is revoked on immovable property and machinery, except one key property needed for a sale to Oppo Mobiles India Pvt Ltd.
• The petitioner must maintain the remaining sale proceeds of Rs 130 crores for the tax period 2022-23 to 2025-26 in its Indian bank account until the appeals are disposed of.
• The assessee or petitioner must inform the jurisdictional officer within 48 hours of receipt of funds and provide account details in which the proceeds are deposited.

The petitioner again argued that these conditions, including the requirement of maintaining a minimum balance of Rs 130 crores out of the sale proceeds of the property, are illegal. Therefore, the matter reached the Supreme Court.

The main issue in this case was whether the funds of the petitioner could be attached or restrained by the authorities, despite the payment of the 10% of the disputed tax made by the petitioner while filing the appeal.

The Supreme Court upheld the decision of the High Court, saying that once the mandatory pre-deposit has been made, the revenue cannot continue to attach to or restrain the bank account of the assessee.

It was observed that there is no such rule that allows the tax authority to take such an action. It also noted that if the petitioner gives an undertaking, the department must refund the balance amount. Accordingly, the Supreme Court issued the following directions:

• The petitioner must file an undertaking that it will keep the refunded Rs 145.5 crores in its bank account and not use it until the appeal is decided, after which the tax department must release the funds.
• During the sale consideration, the petitioner must keep the sale proceeds in its bank account to maintain a balance of Rs 221 crores until the appeal is disposed of.
• The sum of Rs 221 crores was being fixed, as Rs 24 crores was already treated as the pre-deposit amount.