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%.
