The Allahabad High Court has held that the GST Department cannot refuse to restore a taxpayer’s registration merely because it has filed an appeal against an appellate authority’s order directing restoration. 

The bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla has clarified that filing an appeal does not automatically operate as a stay and authorities are bound to comply with the appellate order unless a specific stay has been granted. 

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The decision came in a writ petition filed by a company whose GST registration had been cancelled on allegations that it was not conducting business from its declared place of business and was allegedly issuing invoices without actual supply of goods or services. The registration had been cancelled by the jurisdictional GST authorities in July 2025. 

The dispute originated from a show cause notice issued by the CGST authorities on July 16, 2025. The notice proposed cancellation of the taxpayer’s GST registration under Rule 21(a) and Rule 21(b) of the CGST Rules on the grounds that the taxpayer was allegedly not conducting business from its declared place of business; and it was allegedly issuing invoices without actual supply of goods or services. 

Subsequently, the GST registration was cancelled on July 29, 2025. The taxpayer challenged the cancellation before the appellate authority, which ruled in its favour on January 27, 2026. The appellate authority set aside the order rejecting revocation of cancellation and specifically directed that the taxpayer’s GST registration be restored immediately. It also granted liberty to the Department to initiate recovery proceedings for any outstanding dues. 

Despite the clear appellate direction, the registration was not restored even after nearly five months. Faced with continued non-compliance by the Department, the taxpayer approached the Allahabad High Court seeking a writ directing immediate restoration of its GST registration. 

The Department defended its action by arguing that it had challenged the appellate authority’s order and therefore restoration was not necessary pending the outcome of its appeal. The authorities also relied upon a subsequent survey conducted in April 2026, claiming that no business activity was being carried on by the taxpayer. 

The High Court observed that there was no dispute regarding the fact that the appellate authority had expressly directed restoration of the GST registration. The Court emphasized that the mere filing of an appeal against that order could not be treated as a stay of its operation. 

The Bench noted that GST law contains no provision granting an automatic stay merely because an appeal has been filed. Consequently, the Department had no legal justification for withholding compliance with the appellate order directing restoration of registration. 

The High Court also strongly criticized the conduct of the revenue authorities. It observed that once the Department itself accepted that the taxpayer’s registration stood cancelled, it was only natural that business activities could not continue and the business premises might remain closed until the registration was restored. Therefore, reliance on a subsequent survey showing absence of business activity was misplaced. 

The Court described the Department’s approach as “wholly arbitrary and unreasonable” and rejected the factual basis relied upon to justify non-restoration of the registration. 

The Allahabad High Court directed the GST authorities to revive the taxpayer’s GST registration forthwith and in any event not later than May 18, 2026. However, the Court clarified that such restoration would remain subject to the final outcome of the Department’s appeal against the appellate authority’s order.

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