MSME Arbitration – Bombay HC Flags Lapses of Fabricated Invoices & Post-dated GST Returns

MSME Arbitration

The petitioner Nexus was given contract by the Chief Engineer, Military Engineering Services at Naval Station, Karanja, Uran.

Nexus and SIKCO Engineering Services had entered for setting up the project. The work was started 17.9.2018 and the completion date was 16.4.2019.

By the letter dated 6.8.2019, the work and purchase orders were terminated for non-completion of the project.

The dispute was that the invoices of SES for supplies and the work carried out have not been fully honoured by Nexus.

The Facilitation Council held that Rs.2.05 crores remain payable with interest to the SES as per three out of twenty two invoices.

Nexus claimed that the said invoices were bogus, fabricated and were not even raised on it.

HELD that the core issue that was whether the invoices were fabricated and the basis for raising such disputes were the dates of the GST returns.  However, the GST returns were filed after more than two years when invoices purportedly raised later entailed GST Returns being filed.

Likewise, GST Return for the invoice dated 11.4.2019 was purportedly filed on 5.7.2021 (after two years and when the proceedings were pending) when the GST Returns for other invoices were uploaded in proximity to the dates of said invoices.

This was specifically alleged to be a post-dated action of fabrication.

The issue of a post-dated GST Return raising doubts about the veracity of the invoices was not dealt with in the impugned arbitral award.

The Council ought to have dealt with the issue of how the GST returns had been filed when conciliation proceedings before the Council were pending. There is no whisper on the issue of GST Returns filed after two years in the arbitral award.

 Judgment dated 30.9.2025 of the High Court of Bombay in Commercial Arbitration Petition (L) No.11389 of 2023 of Nexus Infratech Vs. Micro and Small Enterprise Facilitation Council and another