M/S Usha Industries INDIA vs. Union Of INDIA And Ors - Punjab and Haryana High Court, 07 May 2026

Cause title — parties, addresses and appearances

CWP-36104-2 IN THE M/s Usha Indu Union of India CORAM : H H Present : M fo M fo M DEEPAK SIB T under Section GST Act, 2017 to the tax perio 2. T engaged in th garments. 3. A Goods and Ser of DRC-01A w was granted an 74(5) of CGS Supporting evi 2025 (O&M) Sr. No.127 E HIGH COURT OF PUNJAB CHANDIGARH CWP-3610 Date of De ustries (India) Versus a and others HON’BLE MR. JUSTICE DEEPA HON’BLE MS. JUSTICE LAPITA Mr. Sholab Arora, Advocate, or the petitioner. Mr. Ajay Kalra, Senior Standing C or the respondent-Union of India Mr. Saurabh Kapoor, Additional A *** BAL, J. (Oral) his petition is directed against or 74 read with Rule 142 (5) of P 7 and Section 20 of the Integrat od April 2020- March 2021. he petitioner is a partnership fi he business of manufacturing A notice dated 18.11.2024, under rvices Tax Rules, 2017 (for shor was served upon the petitioner n opportunity to show cause as t ST/SGST/IGST/CESS Act-201 idence was attached along with Page 1 of 8 B AND HARYANA AT H 04-2025 (O&M) ecision : 07.05.2026 …Petitioner …Respondents AK SIBAL A BANERJI Counsel a. Advocate General, Punjab. rder dated 28.08.2025, passed unjab GST Act, 2017/Central ed GST Act, 2017, pertaining irm based in Ludhiana and is g and export of readymade r Rule 142(1A) of the Central rt, the 2017 Rules) in the form through which the petitioner to why liability under Section 7 be not imposed upon it. the said notice. VANDANA 2026.05.27 18:51 I attest to the accuracy and integrity of this document CWP-36104-2 4. T 5. W dated 10.12.20 notice was att which the pet time of person of the petition the time when and thereafter respond to suc date learned opportunity to authority but n 6. In that the petitio Accordingly, t (Annexure P-4 demanded from 7. L adjudication o show cause no said show cau the case of the Act as no fr adjudication o should be quas 2025 (O&M) he petitioner did not file any rep What followed was another not 024. Along with such notice, a tached. The petitioner filed a itioner was granted opportunity nal hearing, on the request of cou ner’s suppliers whose GST regis n the petitioner claimed to deal w , on request made by learned c ch information, the matter was counsel appearing for the pe o respond which opportunity wa no response was filed. n the light of the above, the adju oner had claimed ITC on the basi through the impugned adjudica 4) payable GST dues, along w m the petitioner. earned counsel for the petitioner order dated 28.08.2025 is liable otice which preceded it was vagu use notice are accepted, though v petitioner would not be covered raud by the petitioner is mad order has been passed withou shed by this Court in the exercise Page 2 of 8 ply to such notice. tice in the form of DRC-01 summary of the show cause reply dated 19.02.2025 after y of personal hearing. At the unsel for the petitioner, details stration had been cancelled at with them were again supplied counsel for the petitioner, to adjourned. On the adjourned etitioner prayed for another as granted by the adjudicating udicating authority concluded is of non genuine transactions. ation order dated 28.08.2025 ith penalty and interest were r submitted that the impugned e to be set aside because the ue; even if the contents of the vehemently denied, even then d under Section 74 of the 2017 de out; thus, the impugned ut jurisdiction and therefore, e of its writ jurisdiction. VANDANA 2026.05.27 18:51 I attest to the accuracy and integrity of this document CWP-36104-2 8. Pe petition under entertained bec efficacious rem order; even on evasion of tax through the in dated 18.11.20 as also at the petitioner did n authority right 9. L 10. Se was applicable “S er ut su (1 be in of ev ta or w sh in 50 (2 (1 se (3 se co er ut se 2025 (O&M) er contra, learned State coun r Article 226 of the Constitut cause under Section 107 of the 2 medy of filing of a statutory a n merits, the petitioner had no by the petitioner had duly been ntimation initially sent to the p 024 but also through the show c time of hearing of the matter not file a worthwhile response an tly passed the order under challen earned counsel for the parties ha ection 74 of the 2017 Act alon e at the relevant time, reads as fo Section 74. Determination of ta rroneously refunded or input ta tilised by reason of fraud or uppression of facts.- 1) Where it appears to the prope een paid or short paid or err nput tax credit has been wrongly f fraud, or any wilful-misstatem vade tax, he shall serve notice o ax which has not been so paid or r to whom the refund has errone wrongly availed or utilised input how cause as to why he should n the notice along with interest p 0 and a penalty equivalent to the 2) The proper officer shall issue 1) at least six months prior to th

ection (10) for issuance of order. 3) Where a notice has been issu ection (1), the proper office ontaining the details of tax rroneously refunded or input ta tilised for such periods other th ection (1), on the person chargea nsel argued that the present tion of India should not be 2017 Act the petitioner had an appeal against the impugned case as details of fraudulent brought to its notice not only petitioner through DRC-01A cause notice dated 10.12.2024 but in spite of the same the nd therefore, the adjudicating nge. ave been heard. ng with Explanation 2, which ollows:- ax not paid or short paid or ax credit wrongly availed or any willful- misstatement or er officer that any tax has not roneously refunded or where y availed or utilised by reason ent or suppression of facts to on the person chargeable with r which has been so short paid eously been made, or who has t tax credit, requiring him to not pay the amount specified payable thereon under section e tax specified in the notice. e the notice under sub-section he time limit specified in sub- . ued for any period under sub- er may serve a statement, not paid or short paid or ax credit wrongly availed or han those covered under sub- able with tax.

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CWP-36104-2

(4 de 73 sa m ot ar (5 no in fif as pr pa (6 se pa th (7 pa pa su th (8 (1 50 w re (9 re de su (1 (9 fu ta or er (1 se un su pr co

E ‘s in th un 2025 (O&M) 4) The service of statement un eemed to be service of notice un 3, subject to the condition that t aid statement, except the grou misstatement or suppression of fa ther than those covered under s re mentioned in the earlier notic 5) The person chargeable with otice under sub-section (1), pay nterest payable under section 50 fteen per cent. of such tax scertainment of such tax or th roper officer and inform the pro ayment. 6) The proper officer, on receipt erve any notice under sub-sectio aid or any penalty payable unde he rules made thereunder. 7) Where the proper officer is of aid under sub-section (5) falls ayable, he shall proceed to issue ub-section (1) in respect of such he amount actually payable. 8) Where any person chargeabl 1) pays the said tax along with i 0 and a penalty equivalent to tw within thirty days of issue of th espect of the said notice shall be 9) The proper officer sha epresentation, if any, made by th etermine the amount of tax, in uch person and issue an order. 10) The proper officer shall issu 9) within a period of five ye urnishing of annual return for th ax not paid or short paid or inp r utilised relates to or within rroneous refund. 11) Where any person served wi ection (9) pays the tax along w nder section 50 and a penalty e uch tax within thirty days of com roceedings in respect of the said oncluded. xx

xxx

xx Explanation 2 For the purposes suppression’ shall mean no nformation which a taxable per he return, statement, report or a nder this Act or the rules ma nder sub-section (3) shall be nder sub-section (1) of section the grounds relied upon in the und of fraud, or any wilful- facts to evade tax, for periods ubsection (1) are the same as ce. h tax may, before service of the amount of tax along with 0 and a penalty equivalent to on the basis of his own he tax as ascertained by the oper officer in writing of such of such information, shall not on (1), in respect of the tax so er the provisions of this Act or of the opinion that the amount short of the amount actually e the notice as provided for in h amount which falls short of le with tax under sub-section interest payable under section wenty-five per cent. of such tax he notice, all proceedings in deemed to be concluded. all, after considering the he person chargeable with tax, nterest and penalty due from ue the order under sub-section ears from the due date for he financial year to which the put tax credit wrongly availed five years from the date of th an order issued under sub- with interest payable thereon equivalent to fifty per cent of mmunication of the order, all d notice shall be deemed to be xx s of this Act, the expression on-declaration of facts or rson is required to declare in any other document furnished ade thereunder, or failure to VANDANA 2026.05.27 18:51 I attest to the accuracy and integrity of this document

CWP-36104-2

fu pr

11.

A proper officer refunded or w reason of fraud tax, after servi proceeded aga Section 74 wh provides that s which an asse any other docu or failure to fu proper officer.

12.

In form of DRC- the dealings b stood cancelle with regard to petitioner was Details of GSTIN 03AAAFU Name USHA IND S.N o. Seller Name 1 CLASSY WEARS BLUD 2 JARNAIL SINGH 2025 (O&M) urnish any information on being roper officer.” As per the afore quoted provisi that any tax has not been paid where input tax credit has been w d or any wilful-misstatement or ice of notice to the concerned a ainst under Section 74 of the 2 hich existed on the statute book suppression shall mean non-decla essee is required to declare in th ument furnished under this Act urnish any information on being

n the case in hand, intimation wa -01A dated 18.11.2024 bringing by the petitioner were with ent ed and therefore, the petitioner h o such transactions. The table s also served upon it which is as f ITC claimed from cancelled dealer

U2716M1ZA DUSTRIES (INDIA)

Seller GSTIN Cancell ed Date Mon th 03AAOFC6002 G1ZW 14/07/20 19 May 2020 L 03GSPPS7403Q 2ZU 21/10/20 19 Jun, 2020 g asked for, in writing, by the ion, where it appears to the d or short paid or erroneously wrongly availed or utilized by suppression of facts to evade assessee, such assessee can be 2017 Act. Explanation 2 to k at the relevant time, further aration of facts or information he return, statement, report or or the rules made thereunder, g asked for, in writing, by the as sent to the petitioner in the to the petitioner’s notice that tities whose GST registration had fraudulently claimed ITC of the fake suppliers of the under:- rs Date 18-11-2024 FY 2020-21 Amount in Rupees n SGST/C GST IGST/C ESS Total y, 0 2238244 223844 0 44764 88 0 792999 792999 0 15859 98

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CWP-36104-2

3 RAJAN ARORA 4 WINDSO R WAY APPARE LS 5 WICKED STITCH 6 SEEMA JAIN 7 RED WIND EXIM 8 PEPPER ST BLVD 9 LUSH CLOTHI NG CO 10 FREEST YLE BLVD CO 11 ANURAG AGGAR WAL 12 RAJAN ARORA 13 ANURAG AGGAR WAL 14 NEERU JAGGI 15 ASHWA NI KUMAR BANSAL 16 JASVIR KUMAR 17 ASHWA NI KUMAR BANSAL 18 Rainbow Knit Fab 19 RED WIND EXIM 20 PEPPER ST BLVD 21 Bluewater s India 22 Jiya Knitwears 2025 (O&M) 03ABIPA5231E 4ZD 31/03/20 20 Jun, 2020 03AADFW2021 N1ZD 05/12/20 19 Jul, 2020 03AADFW2020 P1ZA 24/06/20 19 Jul, 2020 03ABAPJ4474C 2Z7 01/08/20 19 Jul, 2020 03AAZFR9413 M1ZG 03/12/20 19 Jul, 2020

03AAXFP6081 H1ZT 04/12/20 19 Jul, 2020 03AIFL3287C1 ZK 21/11/20 19 Jul, 2020 03AAGFF5291 E1ZO 24/06/20 19 Jul, 2020 G 03AFLPA3179 A1Z2 01/08/20 20 Aug 2020 03ABIPA5231E 4ZD 31/03/20 20 Sep, 2020 G 03AFLPA3179 A1Z2 01/08/20 20 Sep, 2020 03BEAPJ5199G 1ZL 02/03/20 20 Sep, 2020 03EFGPB3439 M1ZI 14/12/20 19 Sep, 2020 03GFEPK5532L 1ZD 31/05/20 19 Oct, 2020 03EFGPB3439M 1Z1 14/12/2 019 Oct, 2020 03ABBFR1965P 1ZV 01/07/2 020 Oct, 2020 03AAZFR9413 M1ZG 03/12/2 019 Oct, 2020

03AAXFP6081H 1ZT 04/12/2 019 Oct, 2020 03AAWFB1878 R1ZK 01/07/2 020 Oct, 2020 03AAQFJ0482M 1Z2 01/07/2 020 Oct, 2020 0 18350 18350 0 36700 0 38772 38772 0 77544 0 43080 43080 0 86160 0 43080 43080 0 86160 0 47388 47388 0 94776 0 38772 38772 0 77544 0 38772 38772 0 77544 0 43080 43080 0 86160 g, 0 3288182 3288182 0 65763 64 , 0 -18348 -18348 0 -36696 , 0 467424 467424 0 93484 8 , 0 182940 182940 0 36588 0 , 0 1651133 1651133 0 33022 66 0 157953 157953 0 31590 6 0 371335 371335 0 74267 0 0 974912 974912 0 19498 24 0 1614298 1614298 0 32285 96 0 1434931 1434931 0 28698 62 0 468925 468925 0 93785 0 0 959789 959789 0 19195 78

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CWP-36104-2

23 LUSH CLOTHI NG CO

13.

14.

T of DRC-01, w which basis wh filed a reply to the petitioner invoices, e-wa slips etc.

15.

N request made authority again GST registrati request of lear twice, for the the supplied in 16. T failed to provi fraudulently cl genuine. Desp petitioner’s no bank transact petitioner. Tha Section 74 of t 2025 (O&M) 03AAIFL3287C 1ZK 21/11/2 019 Oct, 2020

Tota o the afore intimation, the petitio hereafter, a show cause notice d was served upon the petitioner wh hereof such show cause notice h o the same which we find to be v did not append any supportin ay bills, bank transaction proofs, Nonetheless, during the course by learned counsel for the n provided details of the petition on had been cancelled. On recei rned counsel for the petitioner, ti petitioner to respond but no wri nformation was furnished. hus, in spite of grant of severa ide any worthwhile response w laiming of input tax credit thro pite the details in this regard, otice, no rebuttal evidence in the tions, account ledgers, slips e at being so, the case of the p the 2017 Act as it would be a ca 0 1686044 1686044 0 33720 88 al 16582055 16582055 0 0 33164 110 oner failed to respond. dated 10.12.2024, in the form hich also contained details on had been issued. The petitioner vague as along with such reply ng document in the form of , account ledgers, weightment of personal hearing, on the petitioner, the adjudicating ner’s alleged suppliers whose pt of such information, on the ime was granted, not once but itten or oral response to rebut al opportunities, the petitioner with regard to the petitioner’s ugh dealings which were not having been brought to the form of invoices, e-way bills, etc. were produced by the petitioner would come under ase of suppression in terms of VANDANA 2026.05.27 18:51 I attest to the accuracy and integrity of this document

CWP-36104-2

Explanation 2 the statute boo questioned by 17. In passed the adj deposit GST d

18.

May 07, 2026 vandana

Whether speak Whether repor 2025 (O&M) to Section 74 of the 2017 Act, w ok at the relevant time, the validi the petitioner. n the light of the above, the resp judication order dated 28.08.202 dues payable by it, along with app Dismissed.

(DEE

(LAPI

king/reasoned :

Yes/No rtable :

Yes/No which explanation did exist on ty of which has not even been pondent-authorities had rightly 25 requiring the petitioner to plicable interest and penalty. EPAK SIBAL) JUDGE

ITA BANERJI) JUDGE

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