Bank attachment is revoked upon depositing 50 per cent liability with balance payable in instalments.

By | August 10, 2026
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Bank attachment is revoked upon depositing 50 per cent liability with balance payable in instalments.

Issue

Whether bank account attachments initiated under Section 79 of the CGST/OGST Act, 2017 can be revoked upon the taxpayer undertaking to deposit 50 per cent of the assessed tax liability with the remaining balance to be cleared in equated monthly instalments.

Facts

  • Assessment & Tax Demand: The petitioner, a private limited company, was issued a show cause notice in Form GST DRC-01 for GSTR-2A mismatches covering June 2025, August 2025, and November 2025, leading to a total tax demand of approximately Rs. 2.50 crores.
  • Admission of Liability: The petitioner admitted its tax liability but cited a severe cash flow crunch due to delayed payments from its clients.
  • Recovery Proceedings & Attachment: To enforce recovery under Section 79, the tax authorities issued notices in Form GST DRC-13 to the petitioner’s bankers, attaching its bank accounts.
  • Partial Payment Deposited: Subsequent to the recovery action, the petitioner deposited Rs. 27.5 lakhs each toward CGST and OGST using Form GST DRC-03.
  • Writ Petition Filed: The petitioner filed a writ petition seeking an instalment payment plan under Section 80 and the immediate revocation of the bank account attachments.

Decision

  • Deposit of 50% Liability: The High Court directed the petitioner to deposit 50 per cent of the total assessed amount (Rs. 2,47,51,021) by May 31, 2026, incorporating an adjustment for any post-attachment payments already made.
  • Revocation of Bank Attachments: Upon successful deposit of the 50 per cent threshold, the tax authorities were directed to immediately revoke the Form GST DRC-13 attachments issued to the specified banks.
  • Equated Instalments for Balance: The remaining 50 per cent balance was ordered to be paid in two equal monthly instalments within two months from the date of attachment revocation.
  • Consequence of Default: The Court held that in the event of default, the revenue authority remains at liberty to recover the full outstanding dues along with applicable statutory interest.
  • No Merits Expressed: The Court refrained from expressing any opinion on the merits of the underlying assessment order or the calculation of statutory interest.

Key Takeaways

  • Conditional Relief Against Attachments: Courts may grant equitable relief to distressed taxpayers by ordering the lifting of bank account attachments subject to a substantial upfront deposit (e.g., 50 per cent of the total tax demand).
  • Payment in Deferred Instalments: Where financial distress is genuine due to delayed client receivables, taxpayers can seek structured instalment plans to clear outstanding GST liabilities without halting business operations.
  • Adjustment of Pre-Deposits: Voluntary payments made via Form GST DRC-03 post-attachment are eligible to be offset against the mandatory initial deposit required for revoking attachment orders.
HIGH COURT OF ORISSA
Karan Singh Security Agency (P.) Ltd.
v.
State of Odisha
K.R. MOHAPATRA and MURAHARI SRI RAMAN, JJ.
WP (C) No.14427 of 2026
MAY  21, 2026
Pronoy Mohanty, Adv. and Pradipta Kumar Mohanty, Sr. Adv. for the Petitioner. Sunil Mishra, Standing Counsel for the Respondent.
ORDER
1. This matter is taken up through virtual mode.
2. This writ petition invoking Articles 226 and 227 of the Constitution of India has been filed by the petitioner with the following prayer(s):
“It is therefore, prayed that this Hon’ble Court may graciously be pleased to issue Rule Nisi, in the nature of writ of MANDAMUS and/or any other appropriate writ/writs, direction/directions and order/orders, calling upon the Opp. Parties to show cause as to why the Notice vide DRC-13 dt.09.03.2026, Letter No.968/ dt.09.03.2026 and Letter No.2769/dt.24.03.2026 issued by the O.P. No.4 vide Annexure-6, 7 & 9 respectively shall not be quashed;
AND
Further be pleased to direct the O.Ps. to consider the grievance of the petitioner submitted vide Annexures-8 & 11, by allowing some time to make the balance payment towards GST liability, being admitted by the petitioner, on such suitable equal installments;
AND
If the Opp. Parties fails to show cause and/or show insufficient and/or false cause, make the said Rule Nisi absolute and/or pass any other order as deemed proper.
And for this act of kindness, the petitioner shall as in duty bound ever pray.
3. The Petitioner, a Private Limited Company incorporated under the provisions of the Companies Act, 2013, in pursuance of show-cause notice in Form GST DRC-01 on the ground of mismatch in the returns in Form GSTR-2A, available in the portal, was assessed to tax under the Central Goods and Services Tax Act, 2017 (CGST Act) and Odisha Goods and Service Tax Act, 2017 (OGST Act). With respect to transactions pertaining to the tax periods from June, 2025, August, 2025 and November, 2025 the differential amount as demanded stands at Rs.2,34,65,900.76P. besides interest of Rs.15,45,624.26P. (in toto Rs.2,49,61,525.02P.)
4. It is submitted by Sri Pradipta Kumar Mohanty, learned Senior Counsel being assisted by Sri Pronoy Mohanty, learned counsel that in the present writ petition, the petitioner prays for indulgence of this Court to facilitate the petitioner to deposit the demanded amount of Rs.2,49,61,525.02P. sought to be recovered by the Assistant Commissioner of CT & GST, CT & GST Circle, Bhubaneswar-III, Bhubaneswar.
4.1. He submitted that though the authority concerned by Letter dated 16.03.2026 was intimated that the petitioner is likely to receive payments from different organizations for an amount of around Rs.9,54,00,000/- (approximately), no heed is paid by revoking the attachment order. Since the attachment order has been issued under Section 79 of the GST Act, the petitioner is unable to discharge its liability under the OGST Act.
4.2. He further submitted that this writ petition in the nature of mercy petition has been filed to enable the petitioner to deposit the demanded amount in installments.
5. Sri Sunil Mishra, learned Standing Counsel appearing for the CT & GST Organization vehemently objected for grant of relief claimed by the petitioner. He submitted that there is no provision in the statute to allow the petitioner to discharge tax liability, as admitted, in installments.
5.1. Referring to the Date-Chart, Sri Sunil Mishra, learned Standing Counsel submitted that as the taxable person failed to discharge its tax liability within the period stipulated under the statute, recovery proceedings were initiated under Section 79 of the OGST Act by the Proper Officer. On 19th March, 2026 the petitioner has deposited Rs.27,50,000/- each towards tax under the CGST Act and the OGST Act as disclosed in Form GST DRC-03 towards liability for the month of June, 2025 after initiation of recovery proceeding. Nonetheless, the said amount has not been set off against the corresponding liability. It is, thus, submitted that the petitioner is required to discharge its liability.
6. Heard Sri Pradipta Kumar Mohanty, learned Senior Counsel being assisted by Sri Pronoy Mohanty, learned counsel appearing for the petitioner and Sri Sunil Mishra, learned Standing Counsel appearing for the CT & GST Organization.
7. Considered the submissions of the learned counsel for the parties. From the averments in the writ petition it does emanate that the petitioner could not discharge its liability because of nonclearance of payments by certain organisations against whom services have been provided by it. At paragraph 13, the petitioner has made it clear that “the petitioner admits the same and is also willing to comply such tax liability as instructed by the GST authorities”.
7.1. Perusal of documents enclosed with the writ petition reveals that Notice dated 09.03.2026 in Form GST DRC-13 under Section 79 has been issued addressed to the bankers of the petitioner to make payment of Rs.2,49,61,525.02P. to the Government forthwith or upon the money becoming due or being held. Such notice is subject matter in the writ petition for consideration.
7.2. When the matter was taken up on 18th May, 2026, the following order was passed on the assurance of the counsel for the petitioner:
“1. The petitioner has challenged several orders of attachment issued by the GST Authority on the premise of nonpayment of the dues pertaining to the GST within the time stipulated in several notices issued in the prescribed form.
2. Though there does not appear to be any dispute on the liability to pay the tax so demanded or the amount for which the attachment order is issued, the counsel for the petitioner prays for an accommodation to pay-off the same within the time frame. The petitioner appears to be a Private Ltd. Company incorporated under the Companies Act.
3. Therefore, a direction is passed upon the petitioner to furnish the undertaking indicating the time within which the entire tax amount would be paid. Such undertaking shall be given by the petitioner as a corporate entity as well as individual Director(s) in his personal capacity as well within 20th May, 2026.
4. List this matter on 21st May, 2026.”
7.3. Today, Sri Pradipta Kumar Mohanty, learned Senior Counsel drew attention of this Court to the Affidavit of Undertaking in compliance to order dated 18th May, 2026. The said Affidavit of Undertaking reads as under:
“1. That, I, as a Director of the Petitioner-Company M/s. Karan Singh Security Agency Private Limited, a company incorporated under the provisions of the Companies Act, 2013 bearing Corporate Identification Number (CIN) U80200OD2023PTC043941, having its registered office at 2F/42, ID Market, IRC Village, P.O- Bhubaneswar-751015, District- Khordha, Odisha, on behalf of the said company, so also, for myself, personally undertake to pay and/or deposit the GST Liability as due on date, pertaining to the impugned orders of attachment i.e. Notice vide DRC-13 dt.09.03.2026, Letter No.968/dt.09.03.2026 and Letter No.2769/dt.24.03.2026 issued by the O.P. No.4 vide Annexure-6, 7 & 9 respectively in respect of the accounts of the Petitioner-Company in the Bank of Baroda, Nayapali Branch, Bhubaneswar and Odisha Grameen Bank, Head Office Gandamunda, Bhubaneswar, amounting to Rs.2,47,51,021/- (Two Crores Forty Seven Lakhs Fifty One Thousand Twenty One Rupees), the admitted tax, within a period of two months, from the date of revocation and/or withdrawal of the said attachments and consequential recovery process.”
7.4. In view of such Affidavit of Undertaking dated 20.05.2026 furnished by the Managing Director and the Director of the Petitioner-Company, in the interest of justice, it is apposite to dispose of the writ petition with the following directions/observations:
(i) The petitioner shall deposit fifty percent of the amount of Rs.2,47,51,021/- on or before 31st May, 2026 with the Government of Odisha;
(ii) In such eventuality, the attachment notices in Form GST DRC-13 dated 9th March, 2026 and dated 09.03.2026 against the Bank of Baroda, Nayapalli Branch, Bhubaneswar (Annexures-6 and 7) and the Odisha Grameen Bank, Gandamunda, Bhubaneswar (Annexure-9) issued by the Assistant Commissioner of State Tax, CT & GST Circle, Bhubaneswar-III shall be revoked/withdrawn forthwith on production of proof/evidence of such deposit being made;
(iii) For the balance amount, as undertaken, the petitioner shall deposit the same within two months in two equated instalments from the date of revocation of the notices of attachment;
(iv) The amount(s), if any, deposited after the notices of attachment being issued, as reflected in the Date-Chart furnished by the learned Standing Counsel appearing for the CT & GST Organization, shall be taken into consideration towards deposit of 50% of the amount referred to above;
(v) In the event of default in payment of any of the instalments, as undertaken, the authority of the CT & GST Organization is at liberty to proceed in accordance with law for recovery of the outstanding dues including statutory interest;
8. This Court has not expressed any opinion on the merit of the assessment nor with respect to recovery of statutory interest. The factual narration is made based on the averments and contents of the writ petition and such facts as necessary for the purpose of considering the case of the petitioner qua attachment order under Section 79 of the GST Act are culled out. The CT & GST Organization is free to take steps for levy interest and recover the same in accordance with law.
9. With the aforesaid observations and directions, the writ petition is disposed of. Pending Interlocutory Application(s), if any, shall stand disposed of.