Automatic Stay Under Section 107 of GST: Delhi HC Clarifies Major Relief for Taxpayers
Under Section 107 of the GST Act, a taxpayer can appeal against an order passed by an adjudicating authority. But what happens after filing the appeal and making the pre-deposit? Can the department still attach your bank account? The Delhi High Court has now clarified: No.
Let’s break it down.
What Section 107 of the GST Act Says
Section 107 governs appeals to the appellate authority under GST. As per this provision:
- A taxpayer can file an appeal within 3 months from the date of the original order.
- To admit the appeal, the taxpayer must pay:
- Full admitted tax amount, and
- 10% of disputed tax amount as pre-deposit (maximum ₹25 crore as per Rule 108).
Delhi High Court Ruling: What’s the Case?
In Shivaco Associates v. Commissioner, CGST Delhi South (W.P.(C) 8444/2024), the petitioner filed an appeal under Section 107 after receiving an adverse order. They also paid the mandatory 10% pre-deposit.
Yet, the department proceeded to provisionally attach the petitioner’s bank account under Section 83 of the Act.
The High Court held:
- Once appeal is filed and pre-deposit is made, the impugned order is automatically stayed.
- Any recovery steps (like bank account attachment) are invalid during the pendency of appeal.
- The department must wait for the appellate authority’s decision.
📝 Legal Basis:
The Court relied on the language of Section 107(6) read with Rule 108 and prior judgments like Mahesh Girdhar v. Union of India (Punjab & Haryana HC).
Practical Impact for Taxpayers
This judgment is a big relief for GST assessees facing recovery actions. Here’s what you need to remember:
✅ Filing an appeal with pre-deposit automatically stays recovery.
✅ No bank attachment can be made after that point.
✅ You get legal breathing room till your appeal is heard.
Pre-Deposit and Stay: Step-by-Step
| Step | Action Required |
|---|---|
| Step 1 | Receive adjudication order (e.g., DRC-07) |
| Step 2 | File appeal under Section 107 within 3 months |
| Step 3 | Pay full admitted liability + 10% of disputed tax |
| Step 4 | Upload proof of pre-deposit and appeal (Form GST APL-01) |
| Step 5 | Get automatic stay on recovery actions |
Expert Tip: Don’t Miss the Pre-Deposit
If you skip the pre-deposit or file it incorrectly, the appeal is incomplete, and stay protection won’t apply. Always ensure:
- Payment is made from the correct GSTIN
- Challan is properly tagged to the appeal
- You retain proof of payment and acknowledgment
🧾 Need help filing the appeal? Efiletax can assist you end-to-end — from drafting the memo to uploading on the portal.
Legal Reference
- GST Act Section 107 – Appeals to Appellate Authority (cbic.gov.in)
- Delhi HC Judgment in Shivaco Associates – [Available on delhihighcourt.nic.in]
- Rule 108 of CGST Rules – Filing of Appeal and Pre-deposit requirements
FAQs
Q1. Is the stay granted only after Appellate Authority accepts the appeal?
Ans. No, stay is automatic once appeal is filed and pre-deposit is paid. Authority’s admission is not a precondition.
Q2. What if department attaches my bank account despite stay?
Ans. You can file a writ petition in High Court. Courts have consistently ruled in favour of the taxpayer.
Q3. Is this rule applicable across India?
Ans. Yes. Section 107 is central law and binding across states. Many High Courts, including Punjab & Haryana, Gujarat, and Kerala, have echoed similar views.
Summary
Once an appeal is filed under Section 107 of GST Act and 10% pre-deposit is paid, the recovery of balance demand is automatically stayed. As clarified by Delhi High Court, bank account attachments during appeal are invalid.
Conclusion:
The Delhi HC’s judgment reinforces taxpayer rights and limits departmental overreach. If you’ve received a GST order you disagree with — act fast, file appeal with pre-deposit, and prevent further recovery hassles.
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Let Efiletax handle it professionally — Contact us today for seamless appeal filing and compliance support.