The Delhi High Court has declined to adjudicate the dispute over whether diagnostic services provided by a private laboratory are liable to Goods and Services Tax (GST) or qualify for exemption, holding that the issue must first be decided by the Authority for Advance Ruling (AAR) under the statutory mechanism provided in the CGST Act.
The bench of Justice Anil Kshetarpal and Justice Amit Mahajan observed that Sections 95 to 98 specifically empower the Authority for Advance Ruling to determine questions relating to classification of goods or services, applicability of exemption notifications, and liability to pay GST.
The petitions were filed by Hemogenomics Private Limited challenging a communication dated March 25, 2025, issued by the Delhi GST authorities, which expressed the view that the diagnostic services rendered by the company were taxable at 18% GST. The company contended that the communication adversely affected its tax position and also sought a direction to the Authority for Advance Ruling to decide its applications filed under Section 97 of the CGST Act seeking clarity on the taxability of its services.
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The petitions remained pending because the Delhi AAR was unable to function due to the absence of the required quorum, leaving the taxpayer without an effective statutory forum for obtaining an advance ruling.
During an earlier hearing, the High Court had sought instructions from the Government regarding the vacancy in the Authority for Advance Ruling. At the final hearing, counsel appearing for the Union informed the Court that the appointment of the Union Government member to the Delhi AAR would be issued the same day, thereby completing the quorum necessary for the Authority to function.
The Court subsequently noted that before the order was signed, it was informed that Mr. Vivek Gupta, Additional Commissioner (Legal), CGST Delhi North Commissionerate, had been appointed as the Member of the Delhi Authority for Advance Ruling, thereby removing the obstacle that had prevented the Authority from deciding pending applications.
The Division Bench emphasized that Chapter XVII of the CGST Act creates a comprehensive statutory framework for advance rulings.
Since the issues raised by the petitioner squarely fell within the jurisdiction of the AAR, the High Court held that it would ordinarily refrain from exercising its extraordinary writ jurisdiction when Parliament had created a specialized adjudicatory forum to determine precisely such disputes.
The petitioner also argued that the communication dated March 25, 2025, declaring its diagnostic services taxable at 18% GST was without jurisdiction and had no statutory basis under either the CGST Act or the Delhi GST Act.
However, the High Court declined to examine this contention, observing that any findings on the legality or correctness of the communication could prejudice the proceedings that were already pending before the Authority for Advance Ruling. The Bench therefore left all questions of fact and law open for consideration by the statutory authority.
Having recorded that the statutory forum had become functional again, the Court disposed of the writ petitions without expressing any opinion on the merits of the GST dispute. It directed the Authority for Advance Ruling to consider the petitioner’s pending applications independently, strictly in accordance with law, and without being influenced by the departmental communication dated March 25, 2025.
The Court further expressed the expectation that the applications would be decided expeditiously now that the required quorum had been restored. It also clarified that any party aggrieved by the eventual advance ruling would remain free to pursue the statutory appellate remedies available under the CGST Act.
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