Facts of the Case

The petitioner manufactures and supplies reagents, consumables and calibrators used in diagnostic testing, supplying reagents to hospitals and laboratories, at times bundled with laboratory equipment. By Order-in-Original dated 7th January, 2025, the department confirmed a demand of Rs.39,82,52,601/- (IGST of Rs.19,59,52,169/- and CGST & SGST of Rs.10,11,50,216/- each) under Section 74(9), CGST Act, 2017, together with interest and an equal penalty under Section 74(9) read with Section 122. The demand proceeded on the footing that all of the petitioner's supplies constituted a 'mixed supply' under Section 2(74) of the CGST Act, attracting the highest applicable rate of 18%, whereas the petitioner's case was that pure reagents (which formed the bulk of its supplies) attract only 5% or 12%, and that at most only reagents supplied together with instruments could be treated as a bundled supply. The writ petition, first filed on 4th April 2025 and refiled on 24th September 2025 after being returned for defects, challenged the Order-in-Original directly.

Issues Involved

  1. Whether the supply of reagents together with instruments constitutes a 'composite supply' or a 'mixed supply' under Section 2(74) of the CGST Act, and what rate of tax applies.
  2. Whether the demand relating to reagents supplied without any accompanying instrument was tenable at all under the 'mixed supply' classification.
  3. Whether these questions ought to be examined in writ jurisdiction or before the statutory Appellate Authority.

Petitioner's Arguments

  • Pure reagents, which form a substantial portion of the petitioner's supplies, are separately classifiable at 5% or 12% and cannot be clubbed as 'mixed supply' merely because some supplies involve instruments as well.
  • Even accepting the department's case at its highest, the mixed-supply rate could at most apply to the second category -- reagents supplied along with instruments -- and not to reagent-only supplies.
  • The delay in refiling the petition after it was returned for defects was only a technical delay in refiling, not a fresh filing beyond limitation.

Respondent's Arguments

  • The impugned order is an appealable order under Section 107 of the CGST Act.

Court Order / Findings

  • The classification question -- whether the bundled supply of reagents and instruments is a composite or mixed supply, and whether reagent-only supplies are wrongly caught within the mixed-supply demand -- requires a factual examination that is more appropriately undertaken by the Appellate Authority.
  • The Order-in-Original itself was an appealable order under Section 107, CGST Act, 2017.
  • The delay between the impugned order (7.01.2025) and the refiled petition (24.09.2025) was, at best, a delay in refiling and did not disentitle the petitioner from the appellate remedy.
  • The petitioner was relegated to the statutory appeal, to be filed by 15th November 2025 with the requisite pre-deposit; if so filed, the appeal would be heard on merits and not dismissed on limitation, with a personal hearing and a reasoned order to follow.

Important Clarification

  • The classification dispute between 'composite supply' and 'mixed supply' under Section 2(74) of the CGST Act, being fact-intensive, is ordinarily left to the appellate fact-finding forum rather than decided for the first time in writ jurisdiction.
  • A taxpayer challenging a large mixed-supply demand covering multiple categories of transactions should specifically flag, at the appellate stage, any sub-category (such as reagent-only supplies) that it contends is wrongly swept into the higher-rate classification.

Sections Involved

  • Section 2(74), CGST Act, 2017 -- definition of 'mixed supply'.
  • Section 74(9), CGST Act, 2017 -- determination of tax not paid by reason of fraud, wilful misstatement or suppression of facts.
  • Section 122, CGST Act, 2017 -- penalty for certain offences.
  • Section 107, CGST Act, 2017 -- appeal to the Appellate Authority, including pre-deposit requirements.

Decision – In Favour of

Disposed of with directions; no finding on the composite/mixed-supply classification -- the petitioner was relegated to appeal under Section 107 with protection from limitation.

Case Details

High Court of Delhi at New Delhi; W.P.(C) 15083/2025, CM APPL. 62049/2025 & CM APPL. 62050/2025; Coram: Justice Prathiba M. Singh and Justice Shail Jain; Order dated 26.09.2025.

Link to Download the Order

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