Ortho Clinical Diagnostics India Pvt Ltd Vs Union of India & Ors. (Delhi High Court)
The Issue and Impugned Order
The writ petition filed by Ortho Clinical Diagnostics India Pvt Ltd before the Delhi High Court challenged an Order-in-Original dated January 7, 2025, which confirmed a substantial Goods and Services Tax (GST) demand and penalty. The confirmed demand amounted to ₹39,82,52,601/- (approx. ₹39.82 crores) along with applicable interest, and an equivalent penalty, imposed under Section 74(9) and Section 122 of the CGST Act, 2017.
The petitioner is engaged in the manufacture and supply of reagents, consumables, and calibrators used for diagnostic testing, which are supplied to hospitals and laboratories. The core of the dispute was the classification of these supplies for tax purposes.
Dispute on Supply Classification
The petitioner contended that its supplies fall into two main categories:
1. Only reagents: These are pure supplies that, according to the petitioner, attract a lower tax rate of 5% or 12%.
2. Reagents along with instruments/equipment: This category involves the provision of reagents packaged or bundled with necessary laboratory equipment.
The GST Department had proceeded on the premise that all supplies provided by the petitioner constituted a ‘mixed supply’ under Section 2(74) of the CGST Act. Consequently, the Department imposed the highest tax rate applicable to the bundled items, which was 18%.
The petitioner challenged this categorisation, arguing that even the second category (reagents along with instruments) should correctly be classified as a ‘composite supply’ where the principal supply (reagents) would dictate the applicable tax rate. Furthermore, the petitioner argued that the first category (only reagents) could not, under any circumstances, be classified as a mixed supply, making the demand related to this substantial portion untenable.
Thus, the central legal question was whether the supply of reagents with equipment constitutes a ‘composite supply’ (taxed at the principal item’s rate) or a ‘mixed supply’ (taxed at the highest rate), and whether the demand applied indiscriminately to all supplies was valid.
Court’s Holding and Directions
The Delhi High Court, presided over the matter, observed that the issue presented was inherently factual in nature, requiring a detailed examination of the contract terms, billing practices, and the relationship between the supply of reagents and the equipment.
The Court held that this factual determination was best suited for the statutory Appellate Authority. It noted that the impugned Order-in-Original was an appealable order under Section 107 of the CGST Act.
Judicial Precedent
The Court’s decision to relegate the petitioner to the statutory remedy aligns with the established judicial principle that High Courts, in exercise of their writ jurisdiction under Article 226 of the Constitution of India, generally refrain from entertaining matters where an effective alternate statutory remedy exists, especially when the dispute involves disputed questions of fact, such as the classification of supply in this case. Although no specific judicial precedent was cited in the text of the order, this principle forms the foundation for the Court’s reluctance to examine the merits of the classification dispute.
The Court disposed of the writ petition, directing the petitioner to avail the appellate remedy. To address the delay in filing the writ petition (initially filed in April 2025 and re-filed in September 2025), the Court provided a specific window: the petitioner was permitted to file the appeal by November 15, 2025, along with the requisite pre-deposit. If filed within this time, the Appellate Authority was directed to hear the matter on its merits and not to dismiss it on the ground of limitation. A personal hearing and a reasoned order were also mandated.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
CM APPL. 62050/2025 (for exemption)
2. Allowed, subject to all just exceptions. Application is disposed of.
P.(C) 15083/2025, CM APPL. 62049/2025
3. The present petition challenges the impugned Order-in-Original dated 7th January, 2025 by which the demand raised against the Petitioner has been confirmed in the following terms:
“ 38. In consideration of the preceding discussions and findings, I hereby proceed to issue the following order:-
ORDER:
(i) I hereby confirm the demand of Rs.39,82,52,601/-(Rupees Thirty Nine Crores Eighty Two Lacs Fifty Two Thousand Six Hundred one only) (IGST of Rs.19,59,52,169/-, CGST & SGST of Rs.10,11,50,216/-each) under Section 74 (9) of CGST Act, 2017 read with corresponding provisions of Delhi GST Act, 2017 and IGST Act, 2017; along with applicable Interest under Section 50 of CGST Act, 2017;
ii) I hereby confirm the demand of Interest under Section 50 of CGST Act, 2017 read with corresponding provisions of Delhi GST Act, 2017 and IGST Act, 2017; and
(iii) I hereby impose a penalty ofRs.39,82,52,601/-(Rupees Thirty Nine Crores Eighty Two Lacs Fifty Two Thousand Six Hundred one only) (IGST of Rs.19,59,52,169/-, CGST & SGST of Rs.10,11,50,216/-each) under Section 74 (9) read with Section 122 of the CGST Act, 2017 read with corresponding provisions of Delhi GST Act, 2017 and IGST Act, 2017.”
4. The case of the Petitioner is that it is engaged in the manufacture and supply of reagents, consumables and calibrators which are used for diagnostic testing. The customers of the Petitioner include laboratories and hospitals to whom the Petitioner provides reagents along with laboratory equipment.
5. As per Mr. Lakshmikumaran, ld. Counsel for the Petitioner, pure reagents attract a tax at 5% or 12% depending upon the type of reagents. However, the GST Department has proceeded on the basis that all the supplies provided by the Petitioners are ‘mixed supply’ under Section 2 (74) of the Central Goods and Services Tax Act, 2017 and hence, the highest rate of 18% has been imposed. The Petitioner is aggrieved by the said categorisation, and it is the Petitioner’s case the same would constitute ‘composite supply’.
6. The submission on behalf of the Petitioner is that there are two categories of supplies made by the Petitioner:
i. Only reagents;
ii. Reagents along with instruments.
7. The first category constitutes a substantial portion of the supplies and hence, they could not have been categorized as ‘mixed supplies’. Even if the GST Department’s case is taken at its best, the mixed supplies rate would only apply qua the second category of supplies.
8. Thus, the question raised in the present petition is whether the supply of reagent with equipment would constitute ‘composite supply’ or ‘mixed supply’ and what would be the rate of tax that would be attracted in such a case. Secondly, whether the demand in respect of the first category of supplies is even tenable.
9. In the opinion of this Court, this issue would have to be decided by the Appellate Authority, as there would be a factual examination that would be required. In addition, the impugned order itself is an appealable order under Section 107 of the CGST Act.
10. It is noted that the impugned order is dated 7thJanuary, 2025 and the writ petition was stated to have been first filed on 4th April, 2025, but was returned under defects and has been refiled on 24th September, 2025. This in the opinion of this Court would be at best a delay in refiling.
11. The Petitioner is accordingly relegated to avail of the appellate remedy under Section 107 of the CGST Act and file the appeal by 15thNovember, 2025 along with the requisite pre-deposit. If the same is filed within the said time, the matter would be heard on merits and shall not be dismissed on the ground of limitation.
12. A personal hearing shall be given by the Appellate Authority and a reasoned order shall be passed in accordance with law.
13. Petition is disposed of in these terms. All pending applications, if any, are also disposed of.
