Sanchayita Lahkar

The High Court of Delhi Division Bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta held that where a statutory appeal has been filed under Section 107 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the mandatory pre-deposit has been made, the underlying Order-in-Original shall be deemed to be stayed. Consequently, the petitioner could not be considered a defaulter, and the Department was directed to process his fresh GST registration application accordingly. The Court directed that the application for new registration be processed and a No Objection Certificate (NOC) be issued without insisting on clearance of the entire tax demand that was already under challenge in appeal.

The petitioner, a proprietor operating under the name M/s Khurana Associates, previously held a GST registration bearing number 07AYGPS6777E1ZW. This registration was subjected to a Show Cause Notice (SCN) dated 24th September 2023. An Order-in-Original dated 28th December 2023 was subsequently passed, raising a demand of Rs. 21,72,324 against the petitioner. The petitioner asserted that the cancellation of his registration occurred due to disruptions in business operations following the COVID-19 pandemic.

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Challenging the aforementioned order, the petitioner had earlier filed a writ petition registered as W.P.(C) 4326/2025. On 4th April 2025, the Delhi High Court disposed of this writ petition, allowing the petitioner to avail his statutory appellate remedy under Section 107 of the CGST Act. It was recorded in that judgment that the petitioner had not responded to the SCN despite issuance of a reminder. However, it was contended that the petitioner only recently became aware of the impugned order. The Court permitted him to approach the appellate authority within 30 days, clarifying that the appeal, if filed within this period, should not be dismissed on limitation grounds.

In compliance with the above directions, the petitioner filed an appeal under Section 107 of the CGST Act and also deposited the requisite statutory pre-deposit. During the pendency of this appeal, the petitioner applied for a new GST registration on 5th May 2025.

However, the Department, represented by the Commissioner of State GST (SGST), Delhi, refused to process the petitioner’s fresh registration application. The Department's position was that the petitioner continued to be a defaulter due to the outstanding demand reflected in the Order-in-Original dated 28th December 2023. On this basis, the Department withheld the issuance of the required No Objection Certificate (NOC), which was considered mandatory for processing the fresh GST registration.

The petitioner's counsel submitted that since the appeal was pending and the statutory pre-deposit had already been paid, the Order-in-Original was not final and thus, the petitioner should not be treated as a defaulter.

On the other hand, counsel representing the Department submitted that the NOC would only be issued if the entire demand raised in the Order-in-Original was fully paid, irrespective of the pending appeal.

The petitioner, being aggrieved by the withholding of the NOC and the refusal to process the fresh GST registration, approached the Delhi High Court by filing W.P.(C) 10392/2025, invoking the jurisdiction of the Court under Articles 226 and 227 of the Constitution of India.

The Division Bench examined the prior order dated 4th April 2025 passed in W.P.(C) 4326/2025 and recorded as follows: "Considering that the demand in the impugned order is to the tune of Rs. 21,72,324/-, and the case of the Petitioner is that he acquired knowledge of the order recently, the Petitioner is permitted to approach the appellate authority under Section 107 of the CGST Act, 2017 within a period of 30 days."

Further, the Court noted: "If the appeal is filed within 30 days, the same shall not be dismissed on the ground of limitation and shall be adjudicated on merits, in due accordance with law."

Building on this background, the Court observed that since the appeal was filed and the requisite pre-deposit made, the Order-in-Original had not attained finality. Consequently, it held: "In view thereof, in the opinion of this Court, the Petitioner cannot continue to be treated as a defaulter during the pendency of the appeal."

The Court invoked Section 107(7) of the CGST Act, 2017 and quoted the provision: "Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed."

Relying on this statutory provision, the Court reasoned: "Thus, it is clear that once an appeal has been filed by the Petitioner and the mandatory pre-deposit has been paid, the impugned Order-in-Original shall stand automatically stayed in view of the operation of Section 107(7) of the Central Goods and Service Tax Act, 2017."

It was further recorded that the Department could not treat the petitioner as a defaulter or withhold the issuance of the NOC merely on the ground that the demand was not fully paid.

"The Petitioner can no longer be treated as a defaulter and the NOC cannot be withheld merely on the ground that the said demand which is under challenge has not been paid."

The Delhi High Court, having considered the statutory framework under Section 107 of the CGST Act and the facts presented, issued the following direction:

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"The Department is accordingly directed to process the application for fresh GST Registration filed by the Petitioner and issue NOC with respect to the same."

The Court further clarified the consequence of the NOC issuance:"After the issuance of the NOC, the application filed by the Petitioner shall proceed in accordance with law."

With these directions, the writ petition stood disposed of. The Court concluded: "Accordingly, the petition stands disposed of in said terms. Pending applications, if any, are also disposed of."

Advocates Representing the Parties:

For the Petitioner: Mr. Chandra Datt Joshi, Advocate

For the Respondents: Mr. Harpreet Singh, Senior Standing Counsel with Mr. Jai Ahuja and Ms. Vanshika Kapoor, Advocates; Ms. Avni Singh, Advocate for GNCTD

Case Title: Shri Sarabjeet Singh v. The Commissioner of SGST, Delhi SGST & Ors.

Neutral Citation: 2025: DHC:5864-DB

Case Number: W.P.(C) 10392/2025

Bench: Justice Prathiba M. Singh, Justice Rajneesh Kumar Gupta