The Andhra Pradesh High Court clarified that once an assessee pays the mandatory 10% pre-deposit under Section 107(6) of the APGST Act to file an appeal against an assessment order, there is a deemed stay of recovery for the balance disputed tax. The Court held that authorities cannot institute or maintain any further attachment or recovery actions for the balance amount during the pendency of the appeal. This decision affirms statutory protection for appellants and will serve as binding authority for subordinate courts and APGST authorities.
Summary
| Category | Data |
|---|---|
| Case Name | WP/22461/2025 of Wingtech Mobile Communications (India) Pvt. Ltd. Vs Deputy Commissioner (ST) – I, CNR APHC010442312025 |
| Date of Registration | 21-08-2025 |
| Decision Date | 02-09-2025 |
| Disposal Nature | DISPOSED OF NO COSTS |
| Judgment Author | R. Raghunandan Rao, J. (for the Bench) |
| Concurring or Dissenting Judges | T.C.D. Sekhar, J. (concurring) |
| Court | High Court of Andhra Pradesh |
| Bench | Division Bench: R. Raghunandan Rao, J. & T.C.D. Sekhar, J. |
| Precedent Value | Binding on all subordinate courts under APGST; persuasive for other jurisdictions |
| Type of Law | GST / Taxation / Administrative Law |
| Questions of Law | Whether, upon payment of 10% pre-deposit under Section 107(6) of the APGST Act against a disputed assessment, authorities are barred from further attachment or recovery actions for the balance pending disposal of the appeal. |
| Ratio Decidendi | The Court held that once the mandatory 10% pre-deposit required under Section 107(6) of the APGST Act is paid for filing an appeal against an assessment order, a statutory “deemed stay” operates against further recovery of the balance disputed tax. There is no provision under the APGST Act authorizing authorities to attach accounts or otherwise recover the balance during the pendency of the appeal. Any condition requiring maintenance of a substantial minimum balance (except for the pre-deposit) or continued attachment is without jurisdiction and contrary to the statutory scheme. However, the Court permitted a conditional undertaking by the petitioner to protect the revenue’s interest with respect to the funds in dispute. |
| Facts as Summarised by the Court | The Petitioner’s bank accounts and property were attached to recover a disputed tax demand of approx. Rs. 244 crores. After Rs. 170 crores was recovered via attachment and recovery notice, Petitioner was unable to pay the 10% pre-deposit needed to appeal. The Court facilitated filing of the appeal by deeming the pre-deposit paid out of the attached funds and directed the release of remaining funds upon suitable undertakings. |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Express provisions of Section 107(6) and deemed stay under the APGST Act. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts and APGST authorities in Andhra Pradesh |
| Persuasive For | Other High Courts, Appellate Tribunals, GST authorities in other states |
| Follows | Statutory scheme of Section 107(6) APGST Act regarding pre-deposit and deemed stay |
What’s New / What Lawyers Should Note
- The judgment unequivocally affirms that payment of 10% pre-deposit under Section 107(6) of the APGST Act triggers a statutory deemed stay against all further recovery of the disputed amount during the pendency of appeal.
- Authorities cannot continue or initiate fresh recovery proceedings or maintain attachments for any amount beyond the statutory pre-deposit once an appeal is filed and 10% is deposited.
- Any contrary condition or requirement (such as maintaining a higher minimum bank balance) is ultra vires, unless done with the assessee’s undertaking and only to safeguard revenue interests on very specific facts.
- Lawyers may cite this as binding authority in Andhra Pradesh to prevent coercive recovery beyond the statutory pre-deposit during appeals.
Summary of Legal Reasoning
- Issue Identification: The core issue was whether authorities could continue to attach or restrain the petitioner’s funds beyond the 10% pre-deposit required under Section 107(6) APGST Act, after an appeal is filed.
- Statutory Interpretation: The Court held that Section 107(6) creates a statutory deemed stay mechanism, operating as soon as the mandatory pre-deposit is made for the appeal.
- No Additional Recovery Permitted: The Court found no statutory provision allowing further recovery or attachment during the pendency of an appeal once the pre-deposit is made.
- Revenue Safeguards: Noted the petitioner had volunteered to give an undertaking not to transfer out the disputed funds, ensuring the revenue’s interest is protected pending appeal.
- Relief & Directions: Ordered release of all amounts recovered except the 10% pre-deposit, to be retained as per the statute, subject to petitioner’s undertaking to retain the balance in their bank account until appeal disposal.
Arguments by the Parties
Petitioner
- The recovery notice was issued before expiry of the appeal period, in violation of law and Section 107(6) APGST Act.
- Attaching bank accounts and recovering the entire disputed amount prevented the petitioner from meeting pre-deposit requirements to file an appeal.
- Once 10% pre-deposit is paid, there is deemed statutory stay; requiring maintenance of any higher minimum balance is unlawful.
- Undertook not to withdraw disputed sale proceeds pending appeal.
Respondent (Tax Department)
- The department acted to secure revenue interests by attaching accounts and maintaining a balance equal to the disputed demand.
- Contended that undertakings from the petitioner had not been given at the relevant stage, justifying refusal to lift attachment or order refund.
Factual Background
The petitioner, a company, was assessed a GST demand of approximately Rs. 244 crores via an order dated 02.08.2025. Prior to this, the authorities had provisionally attached the company’s bank accounts under Section 83 of the GST Act. Following a recovery notice issued on 19.08.2025, Rs. 170 crores was debited from the petitioner’s account. Unable to access its funds, the petitioner could not pay the statutory 10% pre-deposit required to appeal. The petitioner approached the High Court, seeking directions to set aside the attachment and recovery, and for refund of all amounts beyond the pre-deposit.
Statutory Analysis
- Section 107(6) of APGST Act: Requires a mandatory pre-deposit of 10% of disputed tax when filing appeal against assessment.
- The Court interpreted Section 107(6) as creating a “deemed stay” prohibiting any further recovery of the balance disputed sum during pendency of the appeal upon deposit of 10%.
- No provision permits continued attachment or recovery against the assessee beyond the pre-deposit once an appeal is filed.
Dissenting / Concurring Opinion Summary
Both judges were in agreement; the judgment is unanimous. No dissenting or separate concurring opinion.
Procedural Innovations
- The Court allowed the statutory pre-deposit to be satisfied by adjusting funds already attached and recovered by the Department, relieving the petitioner from making a further out-of-pocket payment.
- Reliefs were made contingent upon the petitioner providing undertakings to the Department to retain the refunded sums in their bank accounts pending disposal of the appeal, balancing revenue interest and statutory rights.
Alert Indicators
- ✔ Precedent Followed – The court affirms and applies the statutory deemed stay regime under Section 107(6) of the APGST Act, following legislative intent.