Seismic response of two dimensional liquid tanks is numerically simulated using fully nonlinear velocity potential theory. Galerkin-weighted-residual based finite element method is used for solving the governing Laplace equation with fully nonlinear free surface boundary conditions and also for velocity recovery. Based on mixed Eulerian-Lagrangian (MEL) method, fourth order explicit Runge-Kutta scheme is used for time integration of free surface boundary conditions. A cubic-spline fitted regridding technique is used at every time step to eliminate possible numerical instabilities on account of Lagrangian node induced mesh distortion. An artificial surface damping term is used which mimics the viscosity induced damping and brings in numerical stability. Four earthquake motions have been suitably selected to study the effect of frequency content on the dynamic response of tank-liquid system. The nonlinear seismic response vis-a-vis linear response of rectangular liquid tank has been studied. The impulsive and convective components of hydrodynamic forces, e.g., base shear, overturning base moment and pressure distribution on tank-wall are quantified. It is observed that the convective response of tank-liquid system is very much sensitive to the frequency content of the ground motion. Such sensitivity is more pronounced in shallow tanks.