Introduction

Across India, businesses are increasingly facing aggressive GST recovery actions, with the department swiftly issuing Form DRC-13 notices to banks and third parties. These notices, often resulting in sudden account attachments or freezing of funds, can disrupt business operations overnight. For CFOs, finance heads, and advisors, the pressure to respond quickly—and correctly—has never been higher.

This article aims to empower you with a clear, legally robust roadmap to halt wrongful GST recoveries. We break down the statutory protections available under Section 107 of the CGST Act, especially the power of the 10% pre-deposit, and show how recent judicial pronouncements have reinforced these safeguards. Our goal is to help you act decisively, protect your liquidity, and ensure compliance—without getting lost in legal jargon.

A landmark example is the Samrat Marble (HP High Court, Nov 2025) judgment, which clarified that once a taxpayer files an appeal under Section 107 and pays the mandatory 10% pre-deposit, any ongoing recovery—such as a DRC-13 bank attachment—must be immediately withdrawn. The Court’s clear stance: the statutory stay is “automatic,” not discretionary, and applies even to recovery actions already in motion, provided the government has not yet received the funds.

In the sections that follow, we will:

• Analyse the statutory framework (Section 107, Rule 145, DRC-13)
• Unpack the Samrat Marble judgment and its practical impact
• Map out real-world scenarios (before/after appeal, funds frozen, DD issued)
• Provide actionable checklists, specimen representations, and compliance reminders
• Address FAQs and common misconceptions

Whether you are a business owner, CFO, or professional advisor, this guide will help you respond swiftly and confidently to any DRC-13 recovery—arming you with the legal tools and practical steps to safeguard your business. For expert assistance, consider consulting chartered accountants in Chandigarh who specialize in GST litigation and recovery matters.

Statutory Framework: Section 107, Rule 145, and DRC-13

Section 107(6)-(7): Appeal Mechanism and Automatic Stay Explained

Section 107 of the CGST Act provides the right to appeal against any order or decision passed by an adjudicating authority. However, this right comes with a statutory condition: the appellant must pay the full amount of admitted tax, interest, fine, fee, and penalty, plus a pre-deposit of 10% of the disputed tax.

• Section 107(6): Mandates the pre-deposit as a prerequisite for the appeal to be admitted.
• Section 107(7): Once the pre-deposit is made, “recovery of the balance amount shall be deemed to be stayed.”

This means that the moment you file an appeal and pay the 10% pre-deposit, the law itself puts an automatic brake on any further recovery of the disputed amount. There is no need to apply separately for a stay; the protection is built into the statute.