Facts of the Case

Wingtech Mobile Communications (India) Pvt Ltd was assessed on 02.08.2025 for a demand of Rs.244,63,28,470 under Section 73(9) of the APGST Act, 2017. Its bank account had earlier been provisionally attached under Section 83 on 16-17.07.2025, and a recovery notice dated 19.08.2025 under Section 79(1)(c) resulted in Rs.170 crore being recovered from its HSBC account — before the 90-day recovery window had expired and before the petitioner could arrange the mandatory 10% pre-deposit to file an appeal under Section 107(6). The petitioner approached the Andhra Pradesh High Court challenging the recovery notice and the provisional attachment orders as premature and contrary to Section 107(6), seeking release of funds beyond the statutory pre-deposit.

Issues Involved

  1. Whether the department may continue to recover or restrain a taxpayer's funds once 10% of the disputed tax stands paid or deemed paid, triggering the deemed stay under Section 107 pending appeal.
  2. On what terms surplus recovered funds and attached assets should be released while the appeal is pending.

Petitioner's Arguments

  • The recovery notice under Section 79(1)(c), issued before expiry of 90 days, was without jurisdiction and contrary to Section 107(6).
  • Once 10% of the disputed tax (Rs.24.46 crore) is treated as paid, the deemed-stay provision under Section 107 bars any further recovery or restraint on the taxpayer's funds.
  • Requiring retention of Rs.130 crore of future sale proceeds pending appeal was arbitrary, since Rs.170 crore had already been recovered against the Rs.244 crore demand.
  • The petitioner had itself undertaken not to remove sale proceeds from India pending disposal of proceedings.

Respondent's Arguments

  • The Government Pleader contended that the specific undertakings required for release of funds had not actually been furnished by the petitioner, justifying continued restraint pending such undertakings.

Court Order / Findings

  • The Court held that no provision permits continued attachment or restraint of a taxpayer's funds once the deemed stay under Section 107 comes into operation on payment of the mandatory pre-deposit.
  • It directed the petitioner to furnish an undertaking to retain the amount refunded out of the Rs.170 crore in its bank account till disposal of its already-filed appeal, upon which the department was to release the funds beyond the 10% pre-deposit.
  • A further undertaking was directed for any future sale proceeds of attached property, fixing an aggregate minimum balance of Rs.245 crore (Rs.221 crore from proceeds plus Rs.24 crore treated as pre-deposit) to be maintained pending the appeal.
  • Provisional attachment on the specific land parcel was permitted to continue only to facilitate the proposed sale, with intimation safeguards; the writ petition was disposed of on these terms with no costs.

Important Clarification

  • Once 10% of a disputed GST demand stands paid under Section 107(6), a deemed stay of recovery of the balance operates by law.
  • The department cannot continue to attach or withhold a taxpayer's funds beyond that threshold merely by delaying release orders after recovery has already occurred.
  • Courts will balance revenue's interest through structured undertakings on retained funds and future proceeds rather than permitting indefinite blanket attachment.

Sections Involved

  • Section 107(6), CGST/APGST Act, 2017 — mandates a 10% pre-deposit of the disputed tax for filing an appeal and triggers a deemed stay of recovery of the balance.
  • Section 79(1)(c), CGST/APGST Act, 2017 — permits recovery of tax dues from any person holding money for the taxpayer, including banks.
  • Section 83, CGST/APGST Act, 2017 — provisional attachment of property to protect revenue during pendency of proceedings.
  • Section 73(9), CGST/APGST Act, 2017 — determination and order of the tax demand following adjudication.

Decision – In Favour of

The decision is in favour of the assessee. The Court directed release of the recovered funds beyond the statutory 10% pre-deposit, subject to undertakings, and disposed of the writ petition with directions.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Writ Petition No. 22461 of 2025
Coram: Hon'ble Sri Justice R. Raghunandan Rao and Hon'ble Sri Justice T.C.D. Sekhar
Date of Order: 3rd September 2025

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