Fresh GST registration directed to be granted as pending appeal with pre-deposit meant demand stood stayed under Section 107(7) of CGST Act

Case Summary

Case Title: Shri Sarabjeet Singh, Proprietor of M/s Khurana Associates v. The Commissioner of SGST, Delhi & Ors.
Court: High Court of Delhi
Petition Number: W.P.(C) 10392/2025
Date of Judgment: 21st July, 2025
Category of Dispute: GST Registration – Denial of fresh registration due to earlier demand
Relevant Sections: Section 107(6) & 107(7) of the CGST Act, 2017

Facts (Para 3–9)

The petitioner earlier held GST registration no. 07AYGPS6777E1ZW, which was cancelled after a demand of ₹21,72,324/- was raised through an Order-in-Original dated 28.12.2023, pursuant to a show cause notice of 24.09.2023. The petitioner challenged this demand in W.P.(C) 4326/2025. Vide order dated 04.04.2025, the Delhi High Court permitted the petitioner to avail appellate remedy under Section 107 of the CGST Act. Accordingly, an appeal was filed with mandatory pre-deposit, which is still pending adjudication. Meanwhile, the petitioner applied for a fresh GST registration on 05.05.2025. The department rejected it, stating that a No Objection Certificate (NOC) could not be issued until the full demand was cleared, as the petitioner continued to be a “defaulter.”

Questions Before the Court (Para 7–10)

The central question was whether the petitioner could be denied fresh GST registration on the ground of default, even when the earlier demand was under appeal with mandatory pre-deposit made and recovery stayed under Section 107(7) of the CGST Act.

Court’s Observations (Para 11–14)

The Court noted that its earlier order of 04.04.2025 allowed the petitioner to pursue appeal, and under Section 107(7), recovery of the balance demand is deemed stayed once the statutory pre-deposit is made. Therefore, the impugned demand had not reached finality and the petitioner could not be treated as a defaulter. The Department’s stand that NOC can be issued only on full payment of demand was contrary to the statute.

Judgment (Para 14–16)

The Court held that once the appeal is filed and pre-deposit made, the petitioner is no longer a defaulter. Accordingly, the Department was directed to issue the NOC and process the petitioner’s application for fresh GST registration as per law. The writ petition was disposed of in these terms.

Table of Earlier Cases Referred

Between Fine Lines

For businesses, this ruling clarifies that once an appeal is filed with the statutory pre-deposit, the taxpayer cannot be labelled as a “defaulter.” Departments cannot block fresh GST registration by insisting on full payment of disputed demand. This ensures continuity of business operations while litigation is pending.

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