Florida Solvent Private Limited Vs Superintendent (Bombay High Court)
The case concerns a challenge to an order cancelling the petitioner’s GST registration (GSTIN) ab initio under Section 29 of the CGST Act, 2017. The cancellation was based on allegations of fraudulent availment of Input Tax Credit (ITC) through a network of suppliers allegedly involved in issuing fake invoices.
The department justified the cancellation on the basis of buyer-supplier network analysis, stating that the petitioner had received supplies from entities linked to a chain ending in a fake ITC generator. It was alleged that no actual tax had been paid in these transactions and that the petitioner had contravened statutory provisions, causing loss to government revenue. The authorities also referred to prior demand orders and alleged non-compliance with summons.
The petitioner contended that the order was passed without proper application of mind and without considering the documents placed on record. It was submitted that relevant evidence, including tax invoices, e-way bills, ledger accounts, and bank statements, had been furnished but was disregarded. The petitioner also argued that mere cancellation of suppliers’ GST registrations cannot be a valid ground to deny ITC where transactions are bona fide.
The High Court examined the impugned order and found that it lacked cogent findings on whether the petitioner had validly availed ITC in the ordinary course of business. The Court observed that the authorities had failed to independently verify the petitioner’s transactions and had relied primarily on the cancellation status of suppliers. It held that such reliance, without corroborative material demonstrating the petitioner’s involvement in illegality, renders the order arbitrary.
