The Supreme Court upheld the High Court’s order, which balanced the release of recovered GST funds with conditions to secure the revenue’s interest pending an appeal.
Issue
What conditions can be imposed on a taxpayer for the release of an amount recovered by tax authorities, pending the disposal of a statutory appeal, to balance the taxpayer’s need for liquidity against the revenue’s interest in securing the disputed tax demand?
Facts
- An assessment order demanding ₹244.63 crores was passed against the petitioner.
- The tax authority provisionally attached the petitioner’s bank account and subsequently issued a recovery notice under Section 79.
- A sum of ₹170 crores was recovered from the petitioner’s bank account.
- The authority revoked the attachment and recovery orders on the condition that the petitioner maintain a minimum balance of ₹130 crores in its account until its appeal was decided.
- The petitioner challenged this condition in the High Court. The High Court modified the conditions, directing that:
- The authority should release the recovered amount of ₹170 crores after retaining the mandatory 10% pre-deposit required for the appeal.
- The petitioner must furnish an undertaking to keep the refunded amount in its bank account.
- Upon receiving proceeds from a property sale, the petitioner must give a further undertaking to maintain a minimum balance of ₹221 crores (including the pre-deposit amount) until the appeal is disposed of.
- The petitioner filed a Special Leave Petition (SLP) in the Supreme Court against the High Court’s order.
Decision
- The Supreme Court found no reason to interfere with the order passed by the High Court and dismissed the SLP.
- It, however, added a clarification that the amount required to be maintained in the bank account as per the High Court’s direction shall remain unaltered.
Key Takeaways
- Balancing of Interests: The courts structured a solution to balance the interests of both the taxpayer and the revenue. The taxpayer gets immediate liquidity by receiving a refund of the excess recovered amount, while the revenue’s interest is secured through a bank guarantee in the form of a mandated minimum balance.
- Pre-Deposit is Paramount for Appeal: The decision reinforces that the 10% pre-deposit under Section 107 is a mandatory prerequisite for an appeal, and authorities are entitled to retain this amount from any recovery made.
- Undertakings as a Tool: Courts can use undertakings from taxpayers as a legally binding mechanism to enforce conditions, providing a flexible alternative to outright attachment or recovery.
- Judicial Discretion: The case demonstrates the wide discretion of the High Courts in writ jurisdiction to mould relief in a way that is fair and equitable to both parties, a discretion the Supreme Court is often reluctant to interfere with.
SUPREME COURT OF INDIA
Deputy Commissioner ST
v.
Wingtech Mobile Communications (India) (P.) Ltd.
PAMIDIGHANTAM SRI NARASIMHA and ATUL S. CHANDURKAR, JJ.
SLP Appeal (C) No(s). 27302 of 2025
OCTOBER 6, 2025
N. Venkataraman, A.S.G., Sahil Bhalaik, AOR, Tushar Giri, Siddharth Anil Khanna, Ritik Arora, Shivam Mishra, Ms. Gulshan Jahan and Gowtham Polanki, Advs. for the Petitioner. Balbir Singh, Sr. Adv., Rohan Khare, Priyam Bhatnagar, Advs. and Anmol Anand, AOR for the Respondent.
ORDER
1. We are not inclined to interfere with the order passed by the High Court. However, we record the statement of Mr. Balbir Singh, learned senior counsel given on instructions that the undertaking, as indicated in the order passed by the High Court, will be given and that the amount deposited in the bank shall remain unaltered.
2. With these observations, the Special Leave Petition stands disposed of.
3. Pending interlocutory application(s), if any, stands disposed of.
D S Sivadarshan for the Petitioner.
ORDER
R. Raghunandan Rao, J.- The petitioner has been served with an order of assessment, dated 02.08.2025, in which Rs.244,63,28,470/- has been demanded. Earlier to this, a notice dated 17.07.2025 had been issued for provisionally attaching the bank account of the petitioner. Immediately, thereafter, the 1st respondent issued a recovery notice, dated 19.08.2025, under Section 79(1)(c) of the A.P. GST Act, for recovery of the said amount. On account of the said recovery notice which had also been sent to the 5th respondent-Bank, a sum of Rs.170 cores was paid out to the 1st respondent.
2. The petitioner, on account of the attachment of the bank account and on account of the fact that the entire amount available to the petitioner had been paid out to the 1st respondent, could not file an appeal. This was because, the petitioner was required to pay a sum of Rs.24.46 crores as the pre-deposit amount of 10% of the disputed tax. At that stage, the petitioner has approached this Court, by way of the present Writ Petition, seeking the following reliefs:
| A) | Declare the actions of the 1st respondent in issuing the impugned recovery notice dated 19.08.2025 under Section 79(1) (c) of the APGST Act before the expiry of 90 days as without jurisdiction, arbitrary, illegal, unconstitutional and in violation of the settled principles of law and contrary to Section 107(6) of the APGST Act and consequently, set-aside the same. |
| B) | Declare the actions of the respondents Nos.1 to 4 in realising the amount lying in the respondent No.5 bank pursuant to the impugned recovery notice dated 19.08.2025 as without jurisdiction, arbitrary, illegal, constitutional and in violation of the settled principles of law and consequently direct the respondents to forthwith refund the amount. |
| C) | In the alternative, direct the respondent/s to retain only 10% of the disputed demand in terms of Section 107(6) of the APGST Act (raised by way of an order dated 02.08.2025 under Section 73(9) of the APGST Act) and permit the petitioner to set off the same for the statutory predeposit under Section 107(6) of the APGST Act and refund the balance to the petitioner forthwith; |
| D) | Declare the actions of respondent No.3 in issuing the provisional attachment order dated 17.07.2025 bearing RFN No. MA 3707252000924T and RFN No.3707252004243 as without jurisdiction, arbitrary, illegal, unconstitutional and in violation of the settled principles of law and consequently set aside the same. |
3. This Court, on 22.08.2025, had passed an interlocutory order leaving it open to the petitioner to file an appeal against the order of assessment, dated 02.08.2025, with a further direction that the requirement of payment of 10% of the disputed tax, shall be treated to have been complied, by adjusting an amount of Rs.24.4 crores, out of Rs.170 crores, which had been recovered under the order, dated 19.08.2025.
4. This Court had also directed the 3rd respondent-Chief Commissioner, to consider the representation of the petitioner, seeking refund of the amount of Rs.170 crores and for raising the attachment on the bank account of the petitioner, to be disposed of within a period of one week from the date of receipt of the order.
5. When the matter was called today, Sri Deepak Chopra, learned counsel for the petitioner has placed proceedings of the 3rd respondent, dated 01.09.2025, before us. In these proceedings, the 3rd respondent had revoked the provisional attachment orders of 16.07.2025 and 17.07.2025 along with the recovery order, dated 19.08.2025, subject to the following conditions and directions:
| (i) | The attachment of HSBC Bank Current A/c.No.042-825786-001 is revoked, and the assessee is permitted to operate the said account. It is noted that the Department has already effected a partial recovery of Rs.170 crores from this account under Section 79 of the APGST Act, 2017. |
| (ii) | The said recovery shall be deemed to include the statutory pre-deposit of 10 percent of the disputed tax, as mandated under Section 107(6) of the APGST Act, 2017, for the prupsoe of filing an appeal against the assessment order dated 02.08.2025. |
| (iii) | The attachment to the immovable property (land) and plant and machinery is revoked except immovable property located in (Survey No.217/p,220/p,221/p,222/p situated at Sri Balaji District, Renigunta Mandal, Kurukala Village, Andhra Pradesh, admeasuring 9.40 acre or 3.808 Hectares of land vide Provisional Attachment of property under section 83 vide CCSTs Ref.No.CIW/E1/300/2025 dated 02.08.2025 and third party attachment issued to M/s.Oppo Mobiles India Pvt. Ltd GSTIN:37AABC09247K1ZY) to facilitate completion of the proposed sale transaction. |
| (iv) | However, the assessee shall ensure that the sale proceeds, to the extent of the balance demand of approximately Rs.130 crores for the tax periods 2022-23 to 2025-26, are retained in its bank account in India until final disposal of all proceedings and appeals. |
| (v) | The assessee shall intimate to the jurisdictional officer, within 48 hours of receipt of the funds, the details of the sale transaction completed and the bank account in which the proceeds are deposited. |
6. This Court has also been informed that the petitioner had preferred an appeal against the order, dated 02.08.2025, and the same has been taken on file. The order of the 3rd respondent, dated 01.09.2025, also states that the recovery of Rs.170 crores shall be deemed to include the statutory pre-deposit of 10% of the disputed tax as mandated under Section 107(6) of the A.P GST Act, 2017.
7. The contention of the petitioner is that the condition set out in the aforesaid order, requiring the petitioner to maintain a minimum balance of Rs.130 cores out of the sale proceeds of the property of the petitioner is arbitrary. It is contended that the said condition is clearly impermissible for various reasons. Firstly, the tax demand itself is Rs.244 crores and there cannot be requirement of maintaining Rs.130 crores balance while an amount of Rs.170 crores had already been recovered. Secondly, the provisions of Section 107 stipulate that there would be a deemed stay of recovery of disputed tax, once 10% of the said disputed tax has been paid. As such a payment has been made, the deeming provision would come into play and the authorities cannot seek to recover any further money or take steps to restrain the petitioner in this regard. Thirdly, the petitioner itself had undertaken not to take any of the sale proceeds, obtained by the petitioner, from the sale of its assets, which are presently at the midway stage.
8. The Tax authorities attached the bank account of the petitioner on 16.07.2025 and 17.07.2025 under the provisions of Section 83 of the GST Act. On account of such attachment, the ability of the petitioner to make any payment or move any funds was totally restricted. Thereafter, an order of assessment was passed on 02.08.2025 raising a demand of approximately Rs.244 crores. The respondents then issued a recovery notice, dated 19.08.2025, and a sum of Rs.170 crores has been paid out under the said recovery notice. The request of the petitioner, for refund of this amount, on an undertaking of the petitioner that the refunded amount would be kept in the bank account of the petitioner and would not be taken out to India, till disposal of the appeal, was not considered by the 3rd respondent while passing the order, dated 01.09.2025.
9. Shorn of all these facts, the issue before us is whether the funds of the petitioner can be attached or in any manner kept under restraint by the authorities, after payment of 10% of the disputed tax has been made, in the course of the filing of the appeal against the order of assessment.
10. We do not find any provision which would permit such a course of action once a deemed stay comes into play, under the provisions of Section 107 of the GST Act.
11. Another factor that needs to be taken into account is the undertaking of the petitioner to retain the refunded amount as well as any further sale proceedings in the bank account of the petitioner till the appeal is disposed of.
12. At this stage, the learned Government Pleader would contend that such undertakings have not been given and on account of non-furnishing of such undertakings, the 3rd respondent could not permit refund of the funds which had been taken away from the bank account of the petitioner.
13. To our mind, the undertaking which was sought to be given by the petitioner, was an undertaking not to take out the funds which would be returned to the petitioner. However, to ensure that the interests of the revenue are also safeguarded, it would be appropriate that the petitioner gives an undertaking to the 3rd respondent that the funds which would be refunded to the petitioner, would be kept in the account of the petitioner till the disposal of the appeal, and subsequently, to give another undertaking to the effect that as and when sale proceeds are received, the same will be kept in the account of petitioner in such a manner that the petitioner maintains a minimum balance of Rs.245 crores, after adjusting the same against the sum of Rs.24.4 crores which is deemed to have been paid as pre-deposit under Section 107 of the GST Act.
14. In the circumstances, this Writ Petition is disposed of with the following directions:
| 1. | The petitioner shall file an undertaking that the petitioner shall maintain all the amounts refunded by the 3rd respondent, out of Rs.170 crores, which had been recovered from the petitioner under the order dated 19.08.2025, till the disposal of the appeal filed by the petitioner against the order, dated 02.08.2025; |
| 2. | Upon such undertaking being furnished, the 3rd respondent shall pass necessary orders for release of the money recovered from the petitioner after retaining 10% of the disputed tax, required as pre-deposit, under Section 107 of the GST Act; |
| 3. | The petitioner, upon receipt of the sale consideration, referred to by the 3rd respondent, in the order dated 01.09.2025, shall give an undertaking that the petitioner shall keep the said sale proceeds in the bank account of the petitioner so as to ensure that the minimum balance of Rs.221 crores is maintained till the disposal of the appeal; |
| 4. | The sum of Rs.221 crores is being fixed, as a sum of Rs.24 crores is already treated to be pre-deposit required under Section 107 of the GST Act and the aggregate of both these sums would be Rs.245 crores. |
There shall be no order as to costs.
As a sequel, miscellaneous petitions, pending if any, shall stand closed.