Delhi High Court Refuses To Examine GST Liability On Diagnostic Services, Directs Petitioner To AAR

The Delhi High Court has recently refused to examine a challenge to the levy of 18% Goods and Services Tax (GST) on diagnostic services rendered by a private lab, observing that the issue falls within the jurisdiction of the Authority for Advance Ruling (AAR) under the GST Act, 2017.

A division bench of Justices Anil Kshetrapal and Amit Mahajan disposed of two writ petitions filed by a company after being informed that the vacancy in the Delhi Authority for Advance Ruling had been filled, thereby restoring the quorum required for adjudication.

Petitioner had challenged a communication issued by the Delhi government, levying 18% GST on its diagnostic services. Petitioner had also sought directions to the AAR to decide its applications under Section 97.

Previously, the Court was informed that the petitioner's applications before the AAR remained pending due to the non-availability of quorum. Consequently, the Court had directed the Registry to seek instructions from the Additional Solicitor General regarding the filling up of the vacancy.

When the matter was taken up yesterday, the centre's counsel informed the court that an order appointing the member representing the union government to the Authority for Advance Ruling would be issued during the course of the day, thereby completing the quorum.

Recording the submission, the bench held that it would not be appropriate to adjudicate upon the controversy in exercise of its writ jurisdiction at this stage.

"The principal controversy between the parties pertains to the taxability of the diagnostic services rendered by the Petitioner and, more particularly, whether such services are exigible to GST or are entitled to exemption under the provisions of the CGST Act and the notifications issued thereunder," the Court noted.

Referring to the statutory scheme under Chapter XVII of the GST Act, the Court observed that Parliament had created a specialised adjudicatory mechanism for determining issues relating to classification of goods and services, applicability of exemption notifications and liability to pay tax.

It further observed, "Ordinarily, therefore, where the legislature has created such a specialised forum and the aggrieved party has already invoked its jurisdiction, this Court would be slow in undertaking an adjudication upon the very same issues in exercise of its writ jurisdiction under Article 226 of the Constitution of India."

It further observed that, once the vacancy was filled, there was no justifiable reason for the High Court to entertain the dispute.

As such, the Court disposed of the writ petitions and directed AAR to consider the petitioner's applications independently.

Before signing the order, the Court was informed that Vivek Gupta, Additional Commissioner (Legal), CGST, Delhi North Commissionerate, had been appointed as a member of the Delhi Authority for Advance Ruling, thereby filling the vacancy.

For Petitioner: Advocates: Sandeep Chilana, Priyojeet Chatterjee and Devansh Garg.

For Respondents: Advocates: Urvi Mohan and Sumit Kumar (for GNCTD); Farman Ali, CGSC, with Amit Gupta and Usha.