GST Payer Not a Defaulter If Appeal Filed with Pre-Deposit: Delhi HC Directs to Process Fresh Registration and NOC Issuance [Read Order]

The Delhi High Court has directed to process a taxpayer's application for fresh GST registration and issue a No ObjectionCertificate (NOC) and held that the taxpayer cannot be deemed a defaulter while an appeal against the demand order is pending with pre-deposit paid.

Shri Sarabjeet Singh (petitioner), proprietor of M/s Khurana Associates, filed a writ petition under Articles 226 and 227 of the Constitution of India, aggrieved by the non-grant of fresh GST registration.

The petitioner's old GST registration (07AYGPS6777EIZW) was cancelled due to work disruption amid COVID-19. A Show Cause Notice (SCN) was issued on 24th September 2023, followed by an order in original dated 28th December 2023, raising a demand of Rs. 21,72,324.

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The petitioner challenged the order in W.P.(C) 4326/2025, where the court, on 4th April 2025, permitted him to avail appellate remedy under Section 107 of the CGST Act, 2017. The petitioner filed an appeal with the requisite pre-deposit and is pending adjudication.

Meanwhile, the petitioner applied for a new GST registration on 5th May 2025. The Department refused, citing the pending demand and withholding the NOC, treating the petitioner as a defaulter.

The petitioner's counsel argued that an appeal filed by the petitioner challenging the order in original was pending adjudication.

The Revenue's counsel contended that even if an appeal had been filed, NOC requires full demand clearance.

A division bench comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed that the order in original dated 28th December 2023 was under challenge in appeal with pre-deposit paid, invoking an automatic stay on recovery under Section 107(7) of the CGST Act.

The court observed that Section 107(7) deems recovery proceedings stayed upon pre-deposit, preventing defaulter status during appeal pendency.

The bench directed the Department to process the fresh GST registration application and issue the NOC. The court noted that upon NOC issuance, the application filed by the petitioner shall be proceeded in accordance with law. The writ petition was disposed of in these terms, along with pending applications.

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