GST Cancellation Recall Denied Due to Unpaid Dues Found Later, SCN & Demand known Belatedly: Delhi HC directs to take Alternate Remedy [Read Order]

The Delhi High Court declined to quash a GST ( Goods and Services Tax ) demand order arising from, holding that the proper remedy lies in statutory appeal.

The case concerned a petition filed by Chetan Asrani challenging an order dated July 30, 2024, which raised a tax demand of ₹19,31,820 along with interest of ₹16,14,790 and penalty of ₹2,03,099, totaling ₹37,49,709.

The petitioner claimed he was unaware of the Show Cause Notice (SCN) dated May 22, 2024, which led to the impugned demand and that he only became aware of the order in March 2025 during the process of reactivating his GST registration.

The petitioner’s GST registration had earlier been cancelled retrospectively from July 1, 2017, through an order dated July 4, 2023. This cancellation was subsequently challenged in W.P.(C) 9529/2024, and the High Court, in an order dated October 25, 2024, directed that the cancellation order shall stand recalled if there were no tax dues or other legal impediments.

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However, while seeking restoration, the petitioner received a communication from the tax authorities in March 2025 informing him about the pending demand arising from the SCN of May 2024 and the consequent order dated July 30, 2024.

Arguing that he never received the SCN and thus could not respond, the petitioner sought quashing of the order and an opportunity to file a reply and be heard.

The GST department, however, countered that the SCN was duly uploaded on the GSTportal, and despite suspension of registration, the petitioner could have accessed it. The department maintained that failure to respond led to the ex parte order.

The Court, after considering the facts, observed that its earlier direction to recall the cancellation was conditional upon verification of outstanding dues. Since the impugned demand had emerged and stood in the way of such recall, the Court held that the petitioner should avail the statutory remedy under Section 107 of the CGST Act, 2017.

The Bench, comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta, ruled that the demand order was appealable and not fit for interference under writ jurisdiction.

However, in the interest of justice, the Court allowed the petitioner to file an appeal along with the requisite pre-deposit by July 10, 2025. If the appeal is filed within the stipulated time, the demand order shall remain stayed, thereby removing the obstacle to reactivation of the GST registration, subject to no other legal impediment.

The Court also directed that the appeal, if filed on time, shall not be dismissed on the grounds of limitation and shall be considered on its merits.

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