Writ Petition Dismissed in Fake ITC Case; Appeal under Section 107 Permitted

Case Details:

• Case Title: Banson Enterprises & Anr. v. Assistant Commissioner, CGST & Ors.

• Court Name: Delhi High Court

• Petition Number: W.P.(C) 6503/2025

• Relevant Sections: Section 107, Section 122(1), Section 122(3), Section 16 of CGST Act, 2017; Rule 142(1)(a), 142(1A) of CGST Rules, 2017

• Category of Dispute: Input Tax Credit (Fake Invoicing)

• Date of Judgment: 15th May 2025

Between Fine Lines:

1. GST fraud involving fake invoices and wrongful ITC was alleged against Banson Enterprises.

2. The Court declined to exercise writ jurisdiction due to available statutory appeal under Section 107.

3. Petitioner was granted liberty to file an appeal with pre-deposit before 15 July 2025.

4. High Court reaffirmed that ITC misuse affects GST’s structural integrity.

5. Writ dismissed; appeal directed as the proper route for factual dispute resolution.

Facts of the Case:

[Para 3-6]
A search at M/s Banson Enterprises revealed issuance of goods-less invoices, allegedly to facilitate fraudulent ITC claims amounting to ₹1,85,73,718. A Show Cause Notice (SCN) dated 03.08.2024 was issued. Petitioners replied and attended personal hearing. An order-in-original dated 02.02.2025 confirmed demand and penalties.

Question(s) in Consideration:

[Para 7]

1. Was the SCN valid if issued by an unauthorized officer (Rule 142(1)(a))?

2. Was pre-SCN consultation mandatory and absent (Rule 142(1A))?

3. Could a consolidated SCN for multiple years be legally sustained?

Observation of the Court:

[Para 10-15]

• Relied on Assistant Commissioner v. Commercial Steel Ltd. and Elesh Aggarwal v. UOI to affirm that writ is not maintainable when alternate remedy exists.

• Court reiterated that writ jurisdiction applies only under exceptional circumstances (e.g., violation of natural justice or excess of jurisdiction).

• Allegations of fake invoicing strike at the root of the ITC mechanism under Section 16, which is foundational to GST’s working.

• Petitioner’s director admitted to issuing invoices without supply during the Central Excise period.

• In light of established procedure and evidence, the Court declined interference.

Judgment of the Court:

[Para 16-21]
Writ petition dismissed with liberty to appeal under Section 107 by 15.07.2025, subject to pre-deposit. Appeal not to be dismissed on limitation if filed by the said date. Observations in the order will not affect appellate adjudication. Pending applications also disposed of.

Summary of Referred Cases: