Appeal with Pre-Deposit Automatically Stays Order Under Section 107(7) of CGST Act, 2017

The HC held that since the petitioner has filed an appeal against the Order-in-Original and deposited the mandatory pre-deposit, the order is not final and stands automatically stayed under Section 107(7) of the CGST Act, 2017. Consequently, the petitioner cannot be treated as a defaulter during the pendency of the appeal. The department was directed to process the petitioner's application for fresh GST registration and issue the necessary NOC, rejecting any withholding based solely on the disputed demand. The petition was disposed of accordingly.

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ISSUES:

Whether a fresh GST registration can be denied on the ground of non-payment of a demand raised in an Order-in-Original that is under appeal.Whether a petitioner who has filed an appeal under Section 107 of the CGST Act and paid the requisite pre-deposit can be treated as a defaulter during the pendency of the appeal.The legal effect of Section 107(7) of the Central Goods and Service Tax Act, 2017 on recovery proceedings and issuance of No Objection Certificate (NOC) for fresh GST registration.

RULINGS / HOLDINGS:

The Court held that since the Order-in-Original dated 28th December, 2023 is under challenge before the appellate authority and the requisite pre-deposit has been paid, the decision cannot be deemed final and the petitioner cannot be treated as a defaulter during the pendency of the appeal.Emphasizing Section 107(7) of the CGST Act, the Court held 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."Accordingly, the Department cannot withhold the No Objection Certificate (NOC) for fresh GST registration merely on the ground that the demand under challenge has not been paid, and must process the fresh registration application and issue the NOC.

RATIONALE:

The Court applied the statutory framework under the Central Goods and Service Tax Act, 2017, particularly Section 107 governing appeals to the Appellate Authority.Section 107(7) provides that "Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed," thereby automatically staying the impugned order upon payment of the pre-deposit.This interpretation prevents the petitioner from being treated as a defaulter during the pendency of the appeal, ensuring that enforcement actions such as withholding NOC for fresh registration do not undermine the appellate remedy.No dissent or doctrinal shift was indicated in the judgment; the Court reaffirmed the established statutory provisions and their effect on stay of recovery proceedings.

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