Florida Solvent Private Limited v. Superintendent, CGST & Central Excise, Range-II & Others

Background of the Case

In this case, the petitioner, Florida Solvent Private Limited, challenged an Order-in-Original whereby its GST registration was cancelled ab initio under Sections 29(2)(a) and 29(2)(e) of the CGST Act read with Rule 21(e) of the CGST Rules. The cancellation was based on allegations that the petitioner had availed fraudulent Input Tax Credit (ITC) through certain suppliers whose GST registrations were subsequently cancelled by the department on the ground that they were allegedly involved in fake invoicing and non-genuine transactions.

The GST department conducted an investigation and relied upon a buyer-supplier network analysis to trace the flow of transactions among multiple entities. Based on this analysis, the department concluded that the petitioner was part of a chain of fictitious transactions allegedly created for generation and passing of fraudulent ITC. According to the department, the suppliers from whom the petitioner had purchased goods were non-genuine entities and therefore the ITC availed by the petitioner was liable to be denied. Consequently, proceedings were initiated not only for denial of ITC but also for cancellation of the petitioner’s GST registration from the very inception.