🧾 Treco Wire India Pvt. Ltd. vs Commissioner of CGST – Delhi High Court Slams Fake ITC Claims (24 Sept 2025)

Court: Delhi High Court
Bench: Justice Prathiba M. Singh & Justice Shail Jain
Date of Decision: 24th September 2025
Case No.: W.P.(C) 14428/2025
Citation: Treco Wire India Pvt. Ltd. Through Its Director vs The Commissioner of Central Goods & Service Tax & Ors
Source: Indian Kanoon - Read Full Order Here

🏢 Background of the Case

Treco Wire India Pvt. Ltd., a registered GST taxpayer in Delhi, claimed Input Tax Credit (ITC) of about ₹29.9 lakh based on purchases from M/s Balaji Sales Corporation.

Later, the GST Intelligence Wing (DGGI) found that M/s Balaji was a non-existent firm — operating only on paper and issuing bogus GST invoices to pass on fraudulent ITC without supplying any real goods.

The Department issued a Show Cause Notice and after investigation, passed an Order-in-Original (27 January 2025) confirming:

• Wrongly availed ITC: ₹29,90,898

• Equal penalty under Section 74

• Interest under Section 50 of CGST Act

Following this, Treco Wire’s bank account and electronic cash ledger were provisionally attached.

⚖️ What Treco Wire Argued

The company filed a writ petition before the Delhi High Court, instead of filing an appeal.
Their main contentions were:

1. The blocking of their electronic cash ledger was illegal and done without any hearing.

2. They were denied natural justice because the Adjudicating Authority wrongly recorded that no one appeared for personal hearings.

3. The order was unjust as they had purchased goods with valid invoices and had paid the supplier through banking channels.

4. They even challenged Section 16(2)(c) of the CGST Act, claiming it was unconstitutional, as it makes buyers responsible if the supplier fails to pay GST.

⚙️ What the GST Department Said

The Department (CGST Commissionerate) argued that:

• M/s Balaji Sales Corporation was fake and untraceable.

• Treco Wire failed to prove any genuine transaction or supply of goods.

• The order was passed after giving 3 opportunities of hearing.

• The time limit for appeal (3 months + 1 month) had expired.

• Hence, the writ petition was not maintainable.

🧩 Court’s Key Findings (Explained in Simple Language)

1. Delay in Filing Appeal

Under Section 107 of the CGST Act, an appeal must be filed within 3 months, extendable by 1 additional month only.
Treco Wire filed a writ petition much later, not within that period.
👉 Therefore, the High Court held that the order had attained finality and could not be reopened.

2. No Violation of Natural Justice

The Court found that:

• Treco Wire was given three chances to appear.

• They submitted replies on 08 Nov 2024 and 11 Dec 2024.

• But they never attended the hearings.
  Hence, the Court ruled there was no breach of natural justice.

3. Blocking of Electronic Cash Ledger

Once the order became final and unchallenged, the department had full authority to recover dues by blocking or debiting the ledger.
No illegality was found.

4. Fake Supplier, Fake ITC

Treco Wire failed to prove:

• Who from M/s Balaji they dealt with,

• Any actual delivery or transport of goods,

• Any proof of physical receipt of goods.

So, the Court agreed with the Department — ITC was wrongly claimed on bogus invoices.

5. Challenge to Section 16(2)(c)

This issue (whether the buyer should suffer if the supplier defaults) is already pending before Delhi High Court in another case — Bharti Telemedia Ltd. v. Union of India.
The Court said it will follow that judgment later.

🧾 Final Judgment

The Delhi High Court dismissed the writ petition filed by Treco Wire India Pvt. Ltd.

• The order of the department stands confirmed.

• The company must pay tax, interest, and penalty.

• The blocking of the electronic cash ledger is valid.

In short, the High Court found no reason to interfere since the taxpayer neither appealed on time nor proved any real supply.

💡 What Layman Readers Should Learn

1. Verify Your Supplier

Always ensure your supplier:

• Is registered under GST,

• Files GSTR-1 correctly (so your ITC appears in GSTR-2B),

• Has an active GSTIN and is not blacklisted.

Because under Section 16(2)(c), your ITC is valid only if your supplier has actually paid the GST to the government.

2. File Appeals on Time

If you receive a GST order:

• File an appeal within 3 months, extendable by 1 extra month only.

• Don’t rely on writ petitions — High Courts will not entertain them unless there’s clear injustice or lack of hearing.

3. Keep Real Proofs of Supply

When claiming ITC:

• Keep invoices, e-way bills, transport proof, and payment records.

• Without proof of actual supply, ITC can be denied even if invoice looks valid.

4. Practical Remedies

If you’re in a similar position:

• File a Section 107 appeal quickly.

• Apply for unblocking of ledger with detailed reasoning.

• Cooperate in all summons and hearings.

• Don’t depend on “supplier’s word” — verify transactions yourself.

5. Future Care

✅ Verify GST registration of suppliers regularly.
✅ Reconcile your GSTR-2B monthly.
✅ Avoid doing business with suspicious or inactive suppliers.
✅ Always attend personal hearings when notices are issued.

🌍 Applicability

This judgment is by the Delhi High Court, hence binding within Delhi, but persuasive across India — other states’ GST authorities often rely on similar reasoning.
It reinforces that fake ITC = fraud, and limitation periods are strict under GST.

🧑‍⚖️ Case Ownership

• Petitioner: Treco Wire India Pvt. Ltd.

• Respondent: The Commissioner of Central Goods & Service Tax (CGST)

• Bench: Justice Prathiba M. Singh & Justice Shail Jain

• Date: 24 September 2025

🧠 In Short — For Layman

🧩 Even if you have proper invoices, your ITC can be denied if your supplier turns out to be fake.
⏳ Always appeal within 3 months; otherwise, the order becomes final.
💡 GST compliance = trust, verification, and timely action.