UNION OF INDIA VERSUS BHARAT FORGE LTD.

UNION OF INDIA VERSUS BHARAT FORGE LTD.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले


1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.___________ OF 2022
(Arising out of SLP(C) No.4960 of 2021)
UNION OF INDIA & OTHERS …APPELLANT (S)
VERSUS
BHARAT FORGE LTD. & ANOTHER …RESPONDENT(S)
J U D G M E N T
K.M. JOSEPH, J.
1. Leave granted.
2. By the impugned Judgment, High Court has disposed
of the Writ Petition filed by the first respondent
(hereinafter referred to as the “Writ Petitioner”) with
the following directions:
“We, therefore, find it expedient to
Issue a direction to respondent no.2
namely, the General Manager, Diesel
Locomotive Works, Varanasi that if the
GST value is to be added in the base price
to arrive at the total price of offer for
the procurement of products in a tender
and is used to determine Interse ranking
2
in the selection process, he would be
required to clarify the Issue, If any,
with the GST authorities relating to the
applicability of correct HSN Code of the
procurement product and mention the same
in the NIT (Notice inviting tender)
tender/ bid document, so as 'to ensure
uniform bidding from all participants and
to provide all tenderers/bidders a 'Level
Playing Field'.”
3. The appellants take exception to both the reasoning
employed by the High Court and the final direction, as
aforesaid.
4. A global tender was published on 11.04.2019 by the
third appellant (Diesel Locomotive Work through its
Manager, Varanasi). E-tenders were invited for
procurement of turbo wheel impeller balance assembly
2BLW Part No. 16080385 (hereinafter referred as, ‘the
product’). The writ petitioner was one of the
tenderers. So were among others Respondents 6 to 8 in
the Writ Petition. Respondent No. 6 in the Writ
Petition is arrayed as respondent No. 2 in this appeal.
Respondent No.7 and 8 in the Writ Petition were
initially arrayed as Respondents 3 and 4 in the Special
Leave Petition but later deleted on the request of the
appellants.
3
5. On the basis of the tabulation carried out by the
third appellant, respondent no.2 in the appeal emerged
as L1 whereas respondent nos. 7 and 8 to the writ
petition emerged as L2 and L3, respectively. The writ
petitioner emerged only as L4. It is thereupon that the
first respondent filed the writ petition praying for
the following reliefs:
i.a writ order or direction in the nature of
mandamus commanding and directing the
Respondent No.1, i.e., the Tendering Authority
to clarify that the Procurement Product must
be taxed @ 18% under the Relevant HSN Code,
i.e., 84148030, to ensure a Uniform Bidding
from the parties, and also to ensure a level
playing field for all Bidders/ Suppliers;
ii.a writ order or direction in the nature of
mandamus commanding and directing the
respondents stay the effect of the opening of
the Subject Tender No. 10191001 by the
Respondent No.1 and subsequent awarding of the
category/rank from L1-L6 to the various parties
to the Tender;
iii. a writ order or direction in the nature of
mandamus commanding and directing the
respondents in light of the incorrect GST Rate
/HSN Codes, as ought to have been correctly
specified by the Bidders/ Suppliers to the
Subject Tender, this Hon'ble Court may also be
pleased to declare the opening of the Tender a
nullity, and issued a Writ of Mandamus,
directing the Tendering Authority, i.e.,
Respondent No.1, to invite fresh bids with the
HSN Code duly specified;
iv.writ order or direction in the nature of
mandamus commanding and directing the
4
respondents disqualify those Suppliers/Bidders
who are not entering the correct HSN Code/GST
Rate specification and are, thus, paying a GST
of only 5%, as against the applicable rate of
18%.”
THE CASE OF THE WRIT PETITIONER
6. The complaint of the Writ Petitioner can be
noticed at this stage as follows:
A reading of the Notice Inviting Tender
(hereinafter referred to as, the ‘NIT’), would
reveal that the bidders were directed to specify
the percentage of local content of the material
being offered, in accordance with the ‘Make in
India’ Policy. In terms of the said Policy,
preference would be given to those projects, which
have at least 50 per cent local content ordinarily,
such purchase preference being limited to a margin
of 20 per cent. The sixth respondent in the writ
petition (2nd Respondent in this appeal) (L1) is a
trader, importing the product from Walbar
Corporation, Mexico. It was contended that the
tabulated statement of all the financial bids,
would show that the entities, which emerged as L1
5
to L3, had quoted their payment of GST at a rate
of 5 per cent on the base rate. The writ petitioner
had quoted its GST rate as 18 per cent. The writ
petitioner, in fact, had quoted its base price as
rupees seven lakh and three thousand. L1 had quoted
its rate as rupees six lakhs. There is a difference
of just about 17.1 per cent in the base price of
L1 and the writ petitioner. But only on account of
the fact that L1 has shown the rate of GST at five
per cent whereas the writ petitioner has shown with
GST liability at 18 per cent, the total price of
the writ petitioner became Rs. 8,29,540/- whereas
the total price of the L1 became Rs.6,30,000/-. On
account of this, a unilateral act of L1 in showing
the GST rate at 5 per cent, generated a difference
of about 31.6 per cent in the total price quoted
by L1 and the writ petitioner. It is the further
case of the writ petitioner that the GST rates of
each product and service have been duly clarified
by the GST Council (for short, ‘the Council’),
using the Harmonised System of Nomenclature (for
short, ‘the HSN Code), in accordance with Chapter
6
84. It is the case of the writ petitioner that the
Council has declared in the Code that as far as
the product is concerned, the rate has been shown
as 18 per cent. The further case of the writ
petitioner is that, neither the NIT nor the bid
documents, mention the relevant HSN Code
applicable to the product. It has sabotaged the
preservation of the level playing field. This is
for the reason that while the writ petitioner
honestly revealed the correct GST rate, L1 to L3
showed the GST rate at a far lower rate, viz., 5
per cent. This has distorted the tendering process.
Though the writ petitioner had given, on earlier
occasion, representation to the appellants about
earlier instances of such unfair practices, in the
subject NIT, no corrective steps were taken, thus,
culminating in the writ petitioner being relegated
to the position of L4. It also had the propensity
to completely frustrate the ‘Make in India’ Policy
and deprive local manufacturers of the legitimate
preference, it was otherwise entitled.
7
7. The appellants joined issue and filed their
pleadings opposing the reliefs sought by the writ
petitioner. Rejoinder and further affidavits were
filed. The High Court, in the impugned Judgment,
found, inter alia, as follows:
It refers to Clauses 2.7.6, 2.8.6.2, besides
Clause 2.9.2 of the Tender Document, which we shall
advert to in detail. It was found that there is no
dispute that the writ petitioner is a local
manufacturer included in the list of Approved
Vendors. It was further found that the opening of
the subject tender may not be possible as the offer
period had expired due to the interim order passed
by the High Court. Moreover, a subsequent tender
in regard to the product was granted to the writ
petitioner. Prayer nos. 2 and 3 have become
infructuous. However, thereafter the Court posed
the question as to whether there was any flaw in
the procedure adopted by the appellants. The
dimension about the ‘Make in India’ Policy engaged
the attention of the Court. The case of the
appellants that they are not concerned with the
8
GST rates and it was the responsibility of the
bidders to quote the HSN number and GST rate was
found not sound as the GST rate is integral to the
tendering process. Noting that a contract is a
commercial transaction, it was found that the Court
cannot examine the detail of the terms of the
contract. The High Court articulated the
limitations on the Court exercising power of
judicial review. Thereafter, the Court has found
that the Court can certainly examine as to whether
the decision-making process was reasonable,
rational and not arbitrary. Support was drawn from
Judgment of this Court in Reliance Energy Ltd. and
another v. Maharashtra State Road Development
Corpn. Ltd. and others1. Thereafter, it was found
that the bid documents contemplated that the
applicable GST has to be deducted from the bid of
the successful tenderer under the reverse charge
mechanism and the deposit of the same is to be made
with the concerned Tax Authority. There will be
disparity in the total price offered on account of
1 (2007) 8 SCC 1
9
the difference in the GST rate, thus, denying fair
competition or level playing field. The mentioning
of the concerned HSN Code is necessary to determine
the GST rate, which is to be added to the base
price to arrive at the final price. Applying the
said process, it was found that the rate quoted by
the writ petitioner was more than 20 per cent of
the rate quoted by L1 and also L2 and L3, on account
of writ petitioner quoting much higher rate, which
was the correct rate, whereas L1 to L3 did not
quote the correct rate. It was further found that,
if the GST value is to be added in the base price,
to arrive at the total price, and it is used to
determine the inter se ranking in the selection
process, it was the duty of the appellants 1 and 2
to clarify the HSN Code. It is further found that,
mentioning of the HSN Code in the tender document
itself, will resolve ‘all disputes’ relating to
fairness and transparency, by providing a level
playing field in the true spirit of Article
19(1)(g) of the Constitution of India. It is on
10
this reasoning that the relief, as already noted,
was granted.
8. We heard Shri N. Venkataraman, the learned
Additional Solicitor General (ASG), appearing on behalf
of the appellant, Shri Amar Dave, learned Counsel
appearing on behalf of the writ petitioner and Shri
Girdhar Govind, learned Counsel, appearing on behalf
of the second respondent.
9. Shri N. Venkataraman, learned ASG, would point out
that the High Court has issued a Mandamus. A Writ of
Mandamus can be issued, if there is a statutory duty.
There is no statutory duty with the appellants to do
the things, which have been directed in the impugned
Judgment. He would further point out that a proper
appreciation of the Clauses in the bid document, would
reveal the following:
The bidders, on the one hand, undoubtedly, are
called upon to declare the tax rate, as applicable
(Clause 2.7.6). However, a perusal of Clause 2.9.2
would reveal that, in case, the information about
the tax liability is not forthcoming in the bid,
the bid will be considered as inclusive, and any
11
liability on account of such tax, would be payable
by the concerned bidder. It is further pointed out
that Clause 2.8.6.2 declared that the appellants
will not be responsible for payment of taxes and
duties paid by the bidder on a misclassification
or misapprehension of law. In other words, the
contention of the appellants is that the terms of
the bid contemplated that it is expected of the
bidders to bid the correct rate of tax. If the rate
of tax was expressed in the bid, then, the bid
would be evaluated on the consideration of the base
price, after adding the tax component. Should the
bid of such a tenderer be selected, the appellants
would, necessarily, have to pay the price to the
bidder and absorb the tax also. On the other hand,
in the case of a bidder, who does not reveal the
rate of tax separately and merely quotes the base
price, then, if he is selected, he would be
entitled only to the payment of the amount quoted.
In other words, the duty to pay the GST, being an
indirect tax, is on the seller or supplier. He
would have to file the return and assess the tax
12
on self-assessment basis and pay the tax. This
would equally be the position of the tenderer, who
may quote the rate, which may not be the correct
rate but a lesser rate. In both the cases last
mentioned, viz., where the tenderer does not
include the tax component separately, or includes
it, but shows tax rate at a lower rate, the tax
element would have to be absorbed by the bidder.
That is not the look out of the appellants. The
appellants are concerned only with selecting the
lowest of the bidders, who is, no doubt, otherwise
compliant with the norms. The view taken by the
High Court creates considerable impediments, is
unworkable and would lead to greater problems. It
also involves the appellants being obliged to seek
clarification regarding the HSN Code under the GST
Act. There are Authorities under the concerned
taxing Statute, viz., the GST Act, who are charged
with the duty of assessing and collecting the tax
under the Act. The impugned Judgment casts the
burden to discharge duties, which are essentially
to be shouldered by the Taxing Authorities under
13
the Taxing laws. While enviable advance has been
made by the Courts in entertaining application
seeking judicial review, even in contractual
matters, the impugned Judgment represents a case,
where the High Court has erred and overstepped its
limits. He would submit that the judgments of this
Court do not support the impugned Judgment of the
High Court. The impugned judgment, in fact, runs
counter to the law declared by this Court. He would
contend that an indirect tax is ordinarily capable
of being passed on. The liability, in the case of
the indirect tax in question, is on the seller (the
bidders). This is a liability, which it can,
undoubtedly, pass on to the buyer under a contract
but it may instead absorb it. On a conspectus of
the terms, it is, however, clear that no liability
is undertaken by the appellant to pay the tax
except as provided in the terms. The liability
remains the responsibility of the successful
tenderer.
10. Shri Girdhar Govind, learned Counsel for the second
respondent, adopts the contentions of the learned ASG
14
and he would contend that, on facts, there is no
occasion to pass the impugned Judgment. A short counter
affidavit is also filed in this Court.
11. Shri Amar Dave, learned Counsel appearing on behalf
of the Writ Petitioner, would address the following
submissions:
He would support the impugned Judgment and he
contends that all that the High Court has directed,
is that, there must be a level playing field, in
the matter of award of largesse by the State, an
inevitable result of applying Article 14. He would
contend that the crucial aspect is that when the
appellants specifically contemplated the addition
of the tax liability to the base price for
determining the question as to who is to be the
successful tenderer, then, it is imperative that
there should be clarity and certainty about the
tax rate and the HSN Code. This would produce
actual equality of treatment as between the
tenderers. The facts of the case exemplify a
situation where tendering process becomes a
mockery, having regard to the wide disparity
15
between the rate of tax quoted by the writ
petitioner and L1 to L3. A huge difference of 13
per cent has completely impaired and derailed the
fair bid of the writ petitioner and, what is more,
defeated the sublime object sought to be achieved
in the ‘Make in India’ Policy. He would emphasise
that what has been going on, before the High Court
stepped in with the impugned Judgment, was clearly
an unfair trade practice. The stand of the writ
petitioner promotes the fundamental value of
honesty. A bidder, who does not disclose the
correct rate of tax, despite the injunction
contained in Clause 2.7.6, will walk away with a
contract, having indulged in a completely unfair
practice. The implementation of the impugned
Judgement would result in the extinguishment of
this wholly undesirable practice. He would further
contend that the appellants had, in fact, brought
out tender notices, implementing the direction of
the High Court. It is not something, which is
incapable of being achieved. He next drew our
attention to the circumstance, that even the
16
appellant has purchased the product, showing the
tax rate at 18 percent, as is evident from the
document dated 21.03.2017. He would further
contend that the Government of India, in the
Ministry of Defence, has been showing the correct
HSN Code, thus, facilitating the uniform
disclosure of correct rate of tax for all the
bidders. He next relied on Circular dated
31.12.2018 issued by the Government of India in
the Ministry of Finance, Department of Revenue (Tax
Research Unit). Therein, he points out the
following:
“12.3 Turbo charger is specifically
classified under chapter HS code 8414 80 30.
It continues to remain classified under this
code irrespective of its use by Railways.
Therefore, it is clarified that the turbo
charger is classified under heading 8414 and
attracts 18% GST.”
He would, therefore, contend that there is no
impediment, in law or on facts, for the appellants
to comply with the impugned Judgment. He next drew
our attention to the Public Procurement
(Preference to ‘Make in India’) Order, 2017 dated
17
15.06.2017. He emphasised the definition of the
word ‘local content’:
“'Local content' means the amount of value
added in India which shall, unless otherwise
prescribed by the Nodal Ministry, be the
total value of the item procured (excluding
net domestic indirect taxes) minus the value
of Imported content in the item (including
all customs duties) as a proportion of the
total value, in percent.”
12. The learned Counsel for the writ petitioner would
also seek to support the direction of the High Court
with reference to Section 168 of the Goods and Services
Act, 2017. This is apart from pointing out that there
is a provision for advance tax ruling contained in
Section 96 of the GST Tax. Therefore, it is not a case
where the appellants can object to the impugned
direction, on the basis that there is no provision to
‘seek clarification’.
13. In the Rejoinder submission, the learned ASG would
submit as follows:
He would contend that it is the Assessing
Officer, relevant to the supplier of goods and not
the Assessing Officer relevant to the purchaser,
18
who would have authority in the matter and this
adds to the woes of the appellants if they are
compelled to comply with the impugned directions.
As far as the Order dated 15.06.2017 is concerned,
he would contest the version of the writ petitioner
based on the definition of the word ‘local content’
and would point out that the maker of the Order,
viz, the Government of India had, in fact,
contemplated excluding the net domestic taxes. As
far as the subsequent tenders issued is concerned,
it is sought to be justified with reference to the
action of the appellants seeking to comply with
the impugned directions. He would contend that the
impugned directions are wholly impracticable and
far from putting an end to the disputes, it will
only engender unending disputes.
14. Learned ASG would contend that the no reliance can
be placed on the publication in the Business Standard
about tax invasion in the Railways and the purport of
the complaint can only be that if there is evasion, the
Tax Authorities must be awake to their duty and
vigorously pursue the evaders as per law.
19
ANALYSIS
SCOPE OF WRIT OF MANDAMUS
15. The learned ASG contended that the High Court erred
in issuing the direction, which is in the nature of the
Writ of Mandamus. It is his case that a Writ of Mandamus
would lie only when a Statute imposes a duty and there
is failure in discharge of duty. We would think that
this is not a matter which is res integra. As early as
in Comptroller and Auditor General of India, Gian
Prakash, New Delhi and another v. K.S. Jagannathan and
another2 , a Bench of three learned Judges of this Court
had this to say:
“18. The first contention urged by learned
counsel for the appellants was that the
Division Bench of the High Court could not
issue a writ of mandamus to direct a public
authority to exercise its discretion in a
particular manner. There is a basic fallacy
underlying this submission—both with respec
t to the order of the Division Bench and
the purpose and scope of the writ of mandam
us. The High Court had not issued a writ of
mandamus. A writ of mandamus was the relief
prayed for by the respondents in their writ
petition. What the Division Bench did was
to issue directions to the appellants in th
e exercise of its jurisdiction under Articl
e 226 of the Constitution. Under Article 22
2 (1986) 2 SCC 679
20
6 of the Constitution, every High Court has
the power to issue to any person or authori
ty, including in appropriate cases, any gov
ernment, throughout the territories in rela
tion to which it exercises jurisdiction,
directions, orders, or writs including writ
s in the nature of habeas corpus, mandamus,
quo warranto and certiorari or any of them,
for the enforcement of the Fundamental Righ
ts conferred by Part III of the Constitutio
n or for any other purpose. In Dwarkanath v
. ITO [AIR 1966 SC 81: (1965) 3 SCR 536, 54
0] this Court pointed out that Article 226
is designedly couched in a wide language in
order not to confine the power conferred by
it only to the power to issue prerogative
writs as understood in England, such wide
language being used to enable the High
Courts “to reach injustice wherever it is
found” and “to mould the reliefs to meet
the peculiar and complicated requirements
of this country.” In Hochtief Gammon v. Sta
te of Orissa [(1975) 2 SCC 649 : 1975 SCC
(L&S) 362 : AIR 1975 SC 2226 : (1976) 1 SCR
667, 676] this Court held that the powers
of the courts in England as regards the
control which the Judiciary has over the
Executive indicate the minimum limit to
which the courts in this country would be
prepared to go in considering the validity
of orders passed by the government or its
officers.
xxx xxx xxx
20. There is thus no doubt that the High
Courts in India exercising their
jurisdiction under Article 226 have the
power to issue a writ of mandamus or a writ
in the nature of mandamus or to pass orders
and give necessary directions where the
government or a public authority has failed
to exercise or has wrongly exercised the
21
discretion conferred upon it by a statute
or a rule or a policy decision of the
government or has exercised such discretion
mala fide or on irrelevant considerations
or by ignoring the relevant considerations
and materials or in such a manner as to
frustrate the object of conferring such
discretion or the policy for implementing
which such discretion has been conferred.
In all such cases and in any other fit and
proper case a High Court can, in the
exercise of its jurisdiction under Article
226, issue a writ of mandamus or a writ in
the nature of mandamus or pass orders and
give directions to compel the performance
in a proper and lawful manner of the
discretion conferred upon the government or
a public authority, and in a proper case,
in order to prevent injustice resulting to
the concerned parties, the court may itself
pass an order or give directions which the
government or the public authority should
have passed or given had it properly and
lawfully exercised its discretion.”
16. Three years thereafter, in the decision reported
in Andi Mukta Sadguru Shree Muktajee Vandas Swami
Suvarna Jayanti Mahotsav Smarak Trust and others v.
V.R. Rudani and others3, while dealing with the word
‘authority’, used in Article 226 and also dealing with
the issue as to whether Mandamus will lie even if the
3 (1989) 2 SCC 691
22
duty is not imposed under a Statute, this court held
as follows:
“20. The term “authority” used in Article
226, in the context, must receive a liberal
meaning unlike the term in Article 12. Arti
cle 12 is relevant only for the purpose of
enforcement of fundamental rights under Art
icle 32. Article 226 confers power on the
High Courts to issue writs for enforcement
of the fundamental rights as well as non-fu
ndamental rights. The words “any person or
authority” used in Article 226 are, therefo
re, not to be confined only to statutory au
thorities and instrumentalities of the Stat
e. They may cover any other person or body
performing public duty. The form of the bod
y concerned is not very much relevant. What
is relevant is the nature of the duty impos
ed on the body. The duty must be judged in
the light of positive obligation owed by
the person or authority to the affected par
ty. No matter by what means the duty is
imposed, if a positive obligation exists ma
ndamus cannot be denied.
xxx xxx xxx
22. Here again we may point out that mand
amus cannot be denied on the ground that th
e duty to be enforced is not imposed by the
statute. Commenting on the development of
this law, Professor de Smith states: “To be
enforceable by mandamus a public duty does
not necessarily have to be one imposed by
statute. It may be sufficient for the duty
to have been imposed by charter, common law
23
, custom or even contract.” [ Judicial Revi
ew of Administrative Action, 4th Edn., p. 5
40] We share this view. The judicial contro
l over the fast expanding maze of bodies
affecting the rights of the people should
not be put into watertight compartment. It
should remain flexible to meet the requirem
ents of variable circumstances. Mandamus is
a very wide remedy which must be easily
available “to reach injustice wherever it
is found”. Technicalities should not come
in the way of granting that relief under
Article 226. We, therefore, reject the cont
ention urged for the appellants on the main
tainability of the writ petition.”
17. It is necessary to notice, what a Bench of two
learned Judges spoke about the Writ of Mandamus in the
judgment in Mansukhlal Vithaldas Chauhan v. State of
Gujarat4. Therein, this Court held as follows:
“22. Mandamus which is a discretionary
remedy under Article 226 of the Constitutio
n is requested to be issued, inter alia, to
compel performance of public duties which
may be administrative, ministerial or
statutory in nature. Statutory duty may be
either directory or mandatory. Statutory du
ties, if they are intended to be mandatory
in character, are indicated by the use of
the words “shall” or “must”. But this is no
t conclusive as “shall” and “must” have, so
metimes, been interpreted as “may”. What is
4 (1997) 7 SCC 622
24
determinative of the nature of duty,
whether it is obligatory, mandatory or dire
ctory, is the scheme of the statute in whic
h the “duty” has been set out. Even if the
“duty” is not set out clearly and specifica
lly in the statute, it may be implied as
correlative to a “right”.
23. In the performance of this duty, if
the authority in whom the discretion is
vested under the statute, does not act
independently and passes an order under the
instructions and orders of another
authority, the Court would intervene in the
matter, quash the order and issue a
mandamus to that authority to exercise its
own discretion.”
18. Therefore, it is clear that a Writ of Mandamus or
a direction, in the nature of a Writ of Mandamus, is
not to be withheld, in the exercise of powers of Article
226 on any technicalities. This is subject only to the
indispensable requirements being fulfilled. There must
be a public duty. While the duty may, indeed, arise
form a Statute ordinarily, the duty can be imposed by
common charter, common law, custom or even contract.
The fact that a duty may have to be unravelled and the
mist around it cleared before its shape is unfolded may
not relieve the Court of its duty to cull out a public
25
duty in a Statute or otherwise, if in substance, it
exists. Equally, Mandamus would lie if the Authority,
which had a discretion, fails to exercise it and
prefers to act under dictation of another Authority. A
Writ of Mandamus or a direction in the nature thereof
had been given a very wide scope in the conditions
prevailing in this country and it is to be issued
wherever there is a public duty and there is a failure
to perform and the courts will not be bound by
technicalities and its chief concern should be to reach
justice to the wronged. We are not dilating on or
diluting other requirements, which would ordinarily
include the need for making a demand unless a demand
is found to be futile in circumstances, which have
already been catalogued in the earlier decisions of
this Court.
19. Having cleared the air with regard to the
jurisdiction of the High Court in the matter of a Writ
of Mandamus or a direction in the nature thereof, we
may proceed next to the law relating to the ambit of
the Court’s jurisdiction in judicial review in
contractual matters. It is, undoubtedly, too late in
26
the day to countenance the contention that the mandate
of fairness in State action does not extend to the
realm of contract entered into by the State. We would
not burden our judgment chronicling the catena of
decisions, which have expounded the law in this regard.
We deem it sufficient if we refer to the judgment of
this Court in Reliance Telecom Ltd. and another v.
Union of India and another5. After an exhaustive survey
of case law, this Court, inter alia, held as follows:
“42. In Global Energy Ltd. v. Adani Exports
Ltd. [Global Energy Ltd. v. Adani Exports
Ltd., (2005) 4 SCC 435], this Court
reiterated the principles that: (SCC p. 441,
para 10)
“10. … the terms of the invitation to tender
are not open to judicial scrutiny and the
courts cannot whittle down the terms of the
tender as they are in the realm of contract
unless they are wholly arbitrary,
discriminatory or actuated by malice.”
xxx xxx xxx
44. In Michigan Rubber (India)
Ltd. v. State of Karnataka [Michigan Rubber
(India) Ltd. v. State of Karnataka, (2012)
8 SCC 216] , the Court, after referring
to Jagdish Mandal v. State of
Orissa [Jagdish Mandal v. State of Orissa,
(2007) 14 SCC 517] and Tejas Constructions
& Infrastructure (P) Ltd. v. Municipal
Council, Sendhwa [Tejas Constructions &
5 (2017) 4 SCC 269
27
Infrastructure (P) Ltd. v. Municipal
Council, Sendhwa, (2012) 6 SCC 464] ,
expressed the view that (at SCC p. 229, para
23) the basic requirement of Article 14 is
fairness in action by the State, and nonarbitrariness in essence and substance is
the heartbeat of fair play and actions are
amenable to judicial review only to the
extent that the State must act validly for
a discernible reason and not whimsically for
any ulterior purpose and if the State acts
within the bounds of reasonableness, it
would be legitimate to take into
consideration the national priorities. It
further observed that fixation of a value
of the tender is entirely within the purview
of the executive and the courts hardly have
any role to play in this process except for
striking down such action of the executive
as is proved to be arbitrary or
unreasonable. If the Government acts in
conformity with certain healthy standards
and norms such as awarding of contracts by
inviting tenders, in those circumstances,
the interference by courts is very limited
unless the action of the tendering authority
is found to be malicious and a misuse of its
statutory powers and greater latitude is
required to be conceded to the State
authorities in the matter of formulating
conditions of a tender document and awarding
a contract. The Court also laid emphasis on
public interest and the prudence in applying
the principle of restraint where the action
is fair and reasonable and does not smack
of mala fides. It was also emphasised that
the courts cannot interfere with the terms
of the tender prescribed by the Government
simply because it feels that some other
terms in the tender would have been fair,
wiser or logical.”
28
20. This Court also laid down paragraph 46 as follows:
“46. In Census Commr. v. R.
Krishnamurthy [Census Commr. v. R.
Krishnamurthy, (2015) 2 SCC 796 : (2015) 1
SCC (L&S) 589] , a three-Judge Bench of this
Court, after noting several decisions, held
that (SCC p. 809, para 33) it is not within
the domain of the courts to embark upon an
enquiry as to whether a particular public
policy is wise and acceptable or whether a
better policy could be evolved and the
courts can only interfere if the policy
framed is absolutely capricious or not
informed by reasons or totally arbitrary and
founded on ipse dixit offending the basic
requirement of Article 14 of the
Constitution. It further observed that in
certain matters, as often said, there can
be opinions but the court is not expected
to sit as an appellate authority on an
opinion.”
21. We must also bear in mind the judgment which is
relied upon by the High Court in the impugned Judgment.
The High Court has drawn support from the Judgment of
this Court in Reliance Energy Ltd. and another v.
Maharashtra State Road Development Corpn. Ltd. and
others6:
“36. We find merit in this civil appeal.
Standards applied by courts in judicial
review must be justified by constitutional
6 (2007) 8 SCC 1
29
principles which govern the proper exercise
of public power in a democracy. Article 14
of the Constitution embodies the principle
of “non-discrimination”. However, it is not
a free-standing provision. It has to be
read in conjunction with rights conferred
by other articles like Article 21 of the
Constitution. The said Article 21 refers to
“right to life”. It includes “opportunity”.
In our view, as held in the latest judgment
of the Constitution Bench of nine Judges
in I.R. Coelho v. State of T.N. [(2007) 2
SCC 1] , Articles 21/14 are the heart of
the chapter on fundamental rights. They
cover various aspects of life. “Level
playing field” is an important concept
while construing Article 19(1)(g) of the
Constitution. It is this doctrine which is
invoked by REL/HDEC in the present case.
When Article 19(1)(g) confers fundamental
right to carry on business to a company, it
is entitled to invoke the said doctrine of
“level playing field”. We may clarify that
this doctrine is, however, subject to
public interest. In the world of
globalisation, competition is an important
factor to be kept in mind. The doctrine of
“level playing field” is an important
doctrine which is embodied in Article
19(1)(g) of the Constitution. This is
because the said doctrine provides space
within which equally placed competitors are
allowed to bid so as to subserve the larger
public interest. “Globalisation”, in
essence, is liberalisation of trade. Today
India has dismantled licence raj. The
economic reforms introduced after 1992 have
brought in the concept of “globalisation”.
30
Decisions or acts which result in unequal a
nd discriminatory treatment, would
violate the doctrine of “level playing
field” embodied in Article 19(1)(g). Time
has come, therefore, to say that Article 14
which refers to the principle of “equality”
should not be read as a stand alone item
but it should be read in conjunction with
Article 21 which embodies several aspects
of life. There is one more aspect which
needs to be mentioned in the matter of
implementation of the aforestated doctrine
of “level playing field”. According to Lord
Goldsmith, commitment to the “rule of law”
is the heart of parliamentary democracy. On
e of the important elements of the “rule of
law” is legal certainty. Article 14 applies
to government policies and if the policy or
act of the Government, even in contractual
matters, fails to satisfy the test of
“reasonableness”, then such an act or
decision would be unconstitutional.
xxx xxx xxx
38. When tenders are invited, the terms
and conditions must indicate with legal
certainty, norms and benchmarks. This
“legal certainty” is an important aspect of
the rule of law. If there is vagueness or
subjectivity in the said norms it may
result in unequal and discriminatory
treatment. It may violate doctrine of
“level playing field”.”
22. It becomes, however, necessary to notice the
context in the said case, which persuaded the Court to
31
make the aforesaid observations. The case involved a
global tender floated to award a contract, which was
to be done by effecting selection in two stages. The
relevant clause in the tender document, inter alia,
contemplated the fulfilment of certain financial
requirements. We may refer to the following discussion,
which gives the factual context:
“50. Taking into account the above
principles, it is clear that there are two
methods of “cash flow reporting” i.e.,
direct and indirect. Both give identical
results in the matter of the final total.
They differ only in presentation of the
data. They differ only in presentation of
the data contained in the cash flows from
operational activities. No reason has been
given by the consultants of MSRDC for
rejecting the indirect method invoked by
KPMG, chartered accountants of REL/HDEC in
their letter dated 12-8-2005. The said
method is known as “reconciliation method”.”
23. The observations made by the Court, undoubtedly,
draw inspiration from factual matrix essentially
involved in the culling out of the principle of level
playing field, which was found to be impaired on the
basis of a lack of legal certainty, as found
established by the material available on record. In the
32
course of observations in paragraph-36, this Court held
that Article 19(1)(g) confers a Fundamental Right to
carry on a business to a company. We would accept it,
subject to the caveat that Article 19 confers a right
on the citizens, who are natural persons. However, we
take it that, what the Court had in mind was, a
situation where the company is in the party along with
one or more shareholders, who are citizens of India.
However, there can be no quarrel with the position at
law, having regard to the undeniable and breath-taking
advances made by the Courts, drawing inspiration from
Article 14 that equals must be treated equally and more
importantly, the other facet of Article 14, viz., that
all actions of State must be fair, which constitutes
the major plank of attack against State action in the
arena of contracts. This again is subject to the selfrestraint in matters, the scope of which has been dealt
with in regard to various aspects of the matter,
starting with cases relating to challenge to the very
terms of the tender and culminating in the actual award
of the contract. Unless such actions are found to be
clearly arbitrary, illegal, malafide or contrary to any
33
Statute, the courts would be loathe to fetter even the
limited area of freedom of the State has to take
decisions which are fair in cases relating to
contractual matters.
24. With these observations, the time is ripe to
consider the facts.
THE RELEVANT CLAUSES
25. The Clauses in the Tender Document, which engaged
the attention of the High Court are as follows. Clause
2.7.6 reads as follows:
"All the bidders/tenderers while quoting the
rates should clearly indicate the rate of
applicable duties and taxes included in the
prices quoted by them. Any variation in tax
structure/rate due to introduction of GST,
shall be dealt with under Statutory
Variation Clause."
26. The next provision to be borne in mind is Clause
2.8.6.2:
"The purchaser will not be responsible for
payment of taxes and duties paid by the
supplier under misapprehensions of law or
misclassification."
34
27. Finally, we must advert to Clause 2.9.2:
"Tenderers must familiarize themselves
about all the applicable taxes & duties, and
in case the same is not indicated explicitly
in their offer the same will be considered
as inclusive. Any liability on such account
will be payable on firms account."
28. We may also note the following Clauses, which is
put into place on the basis of an amendment, which is
described as Amendment No.1 to the Global Tender Bid
Document. Clause 2.7.6 reads as follows:
2.7 Sales Tax/ Value
Added Tax (VAT)/
CST:
Sales Tax/ Value
Added Tax (VAT)/
CST/ GST:
2.7.6 Nil (Added) For the
tenders due to
open before roll
out of GST: All
the
bidders/tenderers
while quoting the
rates should
clearly Indicate
the rate of
applicable duties
and taxes
included in the
prices quoted by
them. Any
variation in tax
structure/ rate
due to
introduction of;
GST, shall be
dealt with under
35
Statutory
Variation Clause.
29. Clause 2.7.7 reads as follows:
2.7 Sales Tax/ Value
Added Tax (VAT)/
CST:
Sales Tax/ Value
Added Tax (VAT)/
CST/ GST:
2.7.7 Nil (Added) For the
tenders opening
after roll out of
GST: All the
bidders/
tenderers should
ensure that they
are GST compliant
and their quoted
tax structure/
rates are as per
GST Law.
30. At this juncture, we may also notice that there is
a reference to the statutory variation clause. We were
unable to locate a statutory variation clause, as such,
from the tender documents relevant to the bid in
question. However, we would refer to the statutory
variation clause, which is to be found at page 56 of
the counter affidavit (in connection with another
tender) filed by the writ petitioner before this Court
which appears to be the standard clause:
“Statutory Variation In taxes and duties,
or fresh imposition of taxes and duties by
36
State/ Central Governments in respect of the
items stipulated in the contract (and not
the raw materials thereof), within the
original delivery period stipulated in the
contract, or last unconditionally extended
delivery period shall be to Railways
account. Only such variation shall be
admissible which takes place after the
submission of bid. No claim on account of
statutory variation in respect of existing
tax/duty will be accepted unless the
tenderer has clearly indicated in his offer
the rate of tax/duty considered in his
quoted rate. No claim on account of
statutory variation shall be admissible on
account of misclassification by the
supplier/contractor.”
31. The High Court, in the impugned Judgment, has
correctly noticed the contours of the jurisdiction of
courts in the realm of judicial review of action of
State in matters relating to contracts. It is correctly
found that the Court cannot examine the details of the
terms of the contract. The Judgment is apparently
entirely premised on the observations made by this
Court in Reliance Energy Ltd. (supra). It has proceeded
to support its intervention in the Writ Petition,
placing reliance on paragraphs 36 and 38 which we have
already referred to above. Thereafter it poses the
question, as to whether the classification of the HSN
37
Code is integral to the tendering process and answers
it by holding that it is integral and then founds its
interference in the manner done by finding that fair
competition or level playing field would be denied to
each bidder as someone may bag the tender by quoting
the lesser rate of GST, creating a substantial
difference in the total price. Undoubtedly, selection
is based on aggregating the base price with the tax
(GST). If there is lack of clarity, each bidder would
be in a position to take a shot at the tender by
understating the value of the tax.
32. We are of the view that in the facts of the case,
the High Court has erred. The Court was dealing with a
matter pursuant to the NIT dated 11.04.2019. The
tenderers including the writ petitioner, participated
in the tender and quoted their rates. We cannot be
oblivious to the averments in the writ petition that
even previously the same issue had arisen for the
procurement of the identical product. The bids were
opened on 23.11.2018, wherein, some other bidders
quoted at the rate of 5 per cent as the tax liability.
The writ petitioner had according to it, has written
38
letter dated 07.12.2018, pointing out that the product
fell under Chapter 84 and even the appellants had
imported the same product under HSN Code 84148090
attracting GST at the rate of 18 per cent. It also drew
inspiration from a letter from the Ministry of Finance,
Department of Revenue, dated 30.04.2018, being Circular
No.30/4/2018GST, wherein, it was stated that the
Council took certain decisions. It also referred to
customs invoice dated 21.03.2017, showing import of the
product with GST rate being show at 18 per cent. There
is also reference to a letter dated 04.06.2018, written
by the writ petitioner to the Executive Director of
Public Grievance, Ministry of Railways. Therefore, the
writ petitioner must be treated as aware of the
consequences that would flow from the effect of the
terms of the Notification. We, however, notice that the
writ petitioner went ahead and made its bid pursuant
to the NIT dated 11.04.2017. The case of the writ
petitioner, admittedly is, that the appellants opened
the tender and made a tabulated statement and found
that the writ petitioner would stand ranked at L4.
39
33. Before we embark on the scope of the Clauses, we
have set out, it becomes necessary to refer to the
nature and incidence of tax under the GST Act. The
Central Goods and Services Act, 2017 was published in
the Gazette on 12.04.2017 (hereinafter referred to as
the ‘Central Act’). It provides for an indirect tax.
It is, as the very name of the Act suggests, levied on
transactions of goods and services or both. Section 2
(11) defines the ‘State Goods and Service Tax Act’ as
meaning ‘the respective State Goods and Services Tax
Act, 2017’. State enactments mirroring substantially
similar provisions have been passed.
34. Section 9 of the Central Act provides for levy of
the tax called the Central Goods and Services Tax on
all intra-state supply of goods and services, except
as provided therein. Section 9(3) provides that the
Government, may, on the recommendation of the Council,
notify categories of supply of goods or services or
both, where the tax is to be levied, assessed and
recovered on the reverse charge basis. Section 22
provides that every supplier is duty-bound to be
registered under the Act, in the State or the Union
40
Territory, other than special category States, from
where, he makes taxable supply of goods and services,
subject to a certain limit in regard to the turnover.
This is again made subject to the provisions of Section
24, which provides for compulsory registration. Under
Section 37, there is duty to furnish return. Section
59 of the Central Act provides that every registered
person shall self-assess the taxes payable under the
Act and furnish a Tax Return for each tax period, as
specified in Section 39. Section 60 provides for
provisional assessment. There are elaborate provisions
relating to assessment. Chapter 17 provides for advance
rulings. Section 97 thereunder provides that an
applicant, which person has been defined as ‘any person
registered or desirous of obtaining registration under
the Act’ can make an application in proper form in
regard to the questions which are mentioned in Section
97(2). The questions include a question as to the
classification of any goods or services or both. There
is a detailed procedure, which includes an original
Authority, an Appellate Authority and a National
Appellate Authority for Advance Ruling. Section 102
41
provides for rectification of advance ruling. Section
103 provides that the advance ruling shall be binding
on an applicant and on the concerned officer or
jurisdictional officer in respect of the applicant.
Section 103(1A) inserted by the Finance Act, 2019,
amplifies the scope of advance ruling, as provided
therein. An advance ruling can become void in certain
circumstances, which includes fraud or suppression of
material or misrepresentation of facts (see Section
104). Section 105 provides for the powers of the Civil
Court under the CPC in respect of discovery and
inspection, enforcing attendance of any person and
examining him on oath and issuing commission and
production of books of account and other records. We
may also notice Section 168, which has been relied upon
by the writ petitioner. It reads as follows:
“168. Power to issue instructions or
directions. — (1) The Board may, if it
considers it necessary or expedient so to
do for the purpose of uniformity in the
implementation of this Act, issue such
orders, instructions or directions to the
central tax officers as it may deem fit, and
thereupon all such officers and all other
persons employed in the implementation of
this Act shall observe and follow such
orders, instructions or directions.
42
(2) The Commissioner specified in clause
(91) of section 2, sub-section (3) of
section 5, clause (b) of sub-section (9) of
section 25, sub-sections (3) and (4) of
section 35, sub-section (1) of section 37,
sub-section (2) of section 38, sub-section
(6) of section 39, sub-section (5) of
section 66, sub-section (1) of section 143,
sub-section (1) of section 151, clause (l)
of sub-section (3) of section 158 and
section 167 shall mean a Commissioner or
Joint Secretary posted in the Board and such
Commissioner or Joint Secretary shall
exercise the powers specified in the said
sections with the approval of the Board.”
At this juncture, we may notice that the Uttar Pradesh
Goods and Services Act, 2017 essentially mirrors the
Central Act. No doubt, the corresponding provision of
Section 168 in the State Act (Uttar Pradesh) reads as
follows:
“Section 168. Power to issue
instructions or directionsThe Commissioner may, if he considers it
necessary or expedient so to do for the
purpose of uniformity in the
implementation of this Act, issue such
orders, instructions or directions to the
State tax officers as it may deem fit,
and thereupon all such officers and all
other persons employed in the
implementation of this Act shall observe
and follow such orders, instructions or
directions.”
43
35. It is clear that the GST, be it under the Central
Act and the State Goods and Services Act, are indirect
taxes imposed on the supply of goods and services or
both. Except in a case falling under the reverse tax
mechanism, it is the supplier of the goods and
services, who would remain liable to pay the tax. The
supplier is obliged to file the returns which includes
monthly returns and annual return. He is to self-assess
and pay the tax in accordance with the provisions.
There is provision for provisional assessment of tax
in Section 60. It becomes the duty of the Taxing
Authority to assess and recover the tax due. No doubt,
under the reverse tax mechanism, in regard to the
specified transactions and persons covered thereunder,
it would be the recipient of the goods and services or
both, which would be liable to pay the tax due on the
supply of goods or services or both, to it. Having
borne in mind the above brief overview of the tax regime
under the Central Act and the State Act, we may not
proceed to consider the case in greater detail.
36. What is involved before the Court is not a direct
challenge to the terms of the tender. The writ
44
petitioner did not choose to challenge the terms of the
NIT dated 09.04.2019 despite admitted understanding of
the working of similar tender notification leading to
some of the bidders showing the GST rate at 5 per cent
and even writing about it. The writ petitioner chose
to participate in it and filed its bid, showing the tax
rate at 18 per cent. The entities, which were shown as
entitled to rank as L1 to L3, have shown the tax GST
liability as 5 per cent on the product. It is thereafter
that the Writ Petition was filed seeking the reliefs,
we have already noticed.
37. The appellants stand in the shoes of a purchaser
of goods and services. By the global tender floated by
the appellants, the appellants called for e-tenders
from intending suppliers of the goods. The terms of the
tender were well-known to the tenderers. Under Clause
2.7.6, undoubtedly, the bidders and the tenderers,
while quoting the rates, were to clearly indicate the
rate of applicable duties and taxes included in the
price quoted by them. Let us pause for a moment and
analyse its true meaning. Under the said Clause, the
bidders were to quote the rate of applicable duties and
45
taxes, which were included in the price quoted by them.
This Clause must be read in conjunction with Clause
2.8.6, which provides that the purchaser (appellants)
will not be responsible for the payment of taxes and
duties paid by the supplier, on the basis of the
misclassification or a misapprehension of law. This
would mean that the appellants as purchaser was making
it clear that it will have no liability to shoulder,
in the payment of tax if it is found that, while
indicating the rate of applicable duty or tax by the
tenderer, it has wrongly quoted a rate which is lower
than the rate, which it was liable to pay in law. The
quoting of the rate, in other words, by the tenderer,
within the meaning of Clause 2.7.6, would bind the
tenderer and he would not be heard to say that he had
arrived at the rate and made the bid and which stood
accepted, on the basis of misapprehension of law or
misclassification. On the one hand, Clause 2.7.6 gives
the impression that all the bidders/tenderers should
clearly indicate the rate of the applicable duty and
tax in the price quoted by them. We must however read
it in conjunction with Clause 2.9.2. The said Clause
46
provides for a clear duty with the tenderer to acquaint
themselves with all the applicable taxes and duties.
It further provides that in a case, where the taxes and
duties are not indicated explicitly in their offer, the
same will be considered, which means, the offer will
be considered as inclusive. The meaning of this Clause
can only be that while ordinarily the tenderer would
and should include in the tender not only the base
price but the taxes and the rate of tax and arrive at
the global sum at which he is making the bid, Clause
2.9.2 provides for the contingency of the tenderer not
indicating about the applicable taxes and duties. In
other words, he merely quotes a sum without
specifically mentioning about the taxes and duties or
the rates. This is pointed out by the learned ASG to
contend that the fallacy committed by the High Court
lies in it, not giving full meaning to the said Clause.
We would understand that the working of the
statutory variation clause would be as follows:
The successful tenderer must clearly indicate
the rate of tax/duty in his offer. There must be a
variation in the tax and duty, which takes place
47
after the submission of the bid. There cannot be
any claim for such statutory variation on account
of misclassification by successful tenderer. If
these conditions are met, then, the purchaser,
under the statutory variation clause, would appear
to undertake the liability, to pay to the
successful tenderer, the differential tax or duty.
A perusal of Clause 2.7.7, which is the result of
the first amendment would appear to indicate that
for the tenders opening after roll out of GST, all
the bidders, tenderers must ensure that they are
GST compliant and their quoted tax structure/rates
are as per the GST norms. This Clause again must
be read in conjunction with Clause 2.9.2, which
makes it clear that a tenderer may quote a rate
without including any tax component.
38. It is clear that the Clauses read together will
yield the following result, bearing in mind also the
GST regime. The liability to pay tax under the GST
regime is on the supplier. He must make inquires and
make an informed decision as to what would be the
relevant HSN Code applicable to the items and the rate
48
of tax applicable. Thereafter, when he makes the bid,
the issue of competition for winning the bid, would
come into clear focus. The goal of the bidder
ordinarily is to emerge successful and bag the
contract. The extent of profit that he would earn, is
a matter, which is essentially a matter to be decided
by him. He may, for germane reasons, wish to bag a
contract, with situations ranging from one extreme end
of the spectrum, viz., even when the prospect of a loss
stares at him, or a slightly brighter outcome, viz.,
the contract working on a break-even basis or moving
on to an even more optimistic possibility, namely, of
the contract earning him profit, which he is willing
to take at a modest rate or a rate which he considers
as reasonable in his understanding and circumstances.
This is a matter to be left to the commercial expediency
of the bidder. Now, when the matter is viewed from the
perspective of the purchaser, the purchaser seeks to
buy goods and services or both by awarding the contract
to the lowest bidder. When the purchaser happens to be
the State, it would be not fair or reasonable to not
expect it to accept the bid of the lowest bidder unless
49
it decides to not accept the bid of the lowest bidder
for reasons which are fair and legal. No doubt, it is
not the law that the Government is bound to accept the
lowest bid. It is always open to the Government for
relevant, valid and fair reasons, to not accept even
the lowest bid.
39. The terms of the bid cannot be said to be afflicted
with the vice of legal uncertainty. This is not a case
where the principle as enunciated in Reliance Energy
(supra) would be apposite. It is elementary that
principles enunciated in the facts of a case are not
be likened to Euclid’s Theorem, having an inexorable
operation divorced from the facts which arise for
consideration. In this case, the interplay of the three
Clauses, which we have referred to, and its conjoint
operation, could not have left the bidders or the
purchasers (appellants) in any uncertainty.
40. The appellants relied on the judgment of this court
in Sarvesh Refractories (P) Ltd. v. Commissioner of
Central Excise and Customs7. In the said case the
7 (2007) 13 SCC 601
50
product in question was classified by the officer
having jurisdiction over the manufacturers factory as
falling under a particular heading. The case of the
appellants therein was that the heading should be
different. The appellant was the consumer of the goods.
It was found by the Tribunal that the appellant as a
consumer could not get the classification changed from
that of the officer having jurisdiction over the
seller. This Court approved the said view. Therefore,
the appellants would contend that since the liability
to pay the tax is on the successful tenderer (supplier)
and Sections 59 and 60 of the GST Act casts the burden
on the tenderers to file return, self-assess and pay
the tax, it is the jurisdictional officer relevant to
the supplier who can make the proper classification.
The appellants would stand in the shoes of a purchaser.
The appellants cannot therefore be expected to find out
the HSN Code and announce it so as to bind the tenderers
or fetter the power of jurisdictional officer of the
supplier.
41. Learned Additional Solicitor General purportedly
drew support from the judgment of this court in
51
Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran8.
In the said case, the appellant who was the
manufacturer of certain products entered into handling
contract with the respondent. A clause in the contract
inter alia provided that the respondent was to bear and
pay all taxes, duties and other liabilities in
connection with the discharge of his obligation. The
clause, in question, also permitted the appellant to
deduct taxes or duties at source in the matter of
payment of bill to the respondent. The appellant
deducted 5 per cent towards Service Tax. Thereafter,
in accordance with the law, as it stood, there was a
retrospective amendment by which the liability to pay
the service tax stood shifted to the recipient of
service. The Arbitrator, appointed to resolve the
dispute raised by the respondent that he was not liable
to pay the tax on the goods, rejected the contention.
The award was set aside by the High court. What is of
relevance are the observations in paragraphs 37 and 39.
It reads as under:
8 (2012) 5 SCC 306
52
“37. As far as the submission of shifting
of tax liability is concerned, as observed
in para 9 of Laghu Udyog Bharati [(1999) 6
SCC 418], service tax is an indirect tax,
and it is possible that it may be passed
on. Therefore, an assessee can certainly
enter into a contract to shift its
liability of service tax.”
“39. The provisions concerning service tax
are relevant only as between the appellant
as an assessee under the statute and the
tax authorities. This statutory provision
can be of no relevance to determine the
rights and liabilities between the
appellant and the respondent as agreed in
the contract between the two of them.
There was nothing in law to prevent the
appellant from entering into an agreement
with the respondent handling contractor
that the burden of any tax arising out of
obligations of the respondent under the
contract would be borne by the respondent.
It was further found that the clause properly read
could not support the case of the respondent.
42. It is the contention of the appellants herein that
even though GST is an indirect tax, it does not mean
that the tax should be passed on to the buyer. It is
their further case that a contract to the contrary
either by way of absorption of taxes or quoting the
reduced rate of taxes including zero taxes will not,
53
in any way, interfere with the statutory levy and
payment of GST in the hands of the supplier. While the
law does not prohibit the passing of the incidence of
tax to the buyer, it is the case of the appellants that
it is not a pre-condition for either charging the tax
or remitting the same by the supplier.
43. The argument of the writ petitioner, which has
found favour with the High Court and reiterated before
us by Shri Amar Dave, learned Counsel for the writ
petitioner is that since the tender conditions
contemplate the adding of the tax to the base price for
the purpose of arriving at the ranking, which, in turn,
will determine, as to who will be the successful
bidder, there is the unfair trade practice indulged in
by some of the bidders to understate the rate of tax.
There is an eminent need for the State (appellants) to
indicate the HSN Code. Once it is indicated, it becomes
a panacea, as it were, to the evil, which has been
perceived and successfully pressed by the writ
petitioner. Is that so? The answer to this question,
has both legal and factual dimensions. As far as the
legal aspects are concerned, the fundamental question,
54
we must pose is, whether there exists any public duty
with the appellants to indicate the HSN Code when they
float a public tender. Here the learned ASG is correct,
when he points out that there is no statutory duty cast
on the appellants to indicate the HSN Code in a tender
of the kind we are concerned with. Proceeding on the
basis that a public duty may emerge, not merely from a
Statute but in various other ways, which has been
touched upon, in Andi Mukta (supra) as also, in Mansukh
Lal (supra) and even on an expansive exploration, does
such a duty flow from any other legitimate source?
THE CIRCULAR OF THE RAILWAY BOARD DATED
05.09.2017
44. The writ petitioner, no doubt, lays store by the
Communication dated 05.09.2017. It is, undoubtedly,
issued by the Railway Board. We may advert to the same:
“BHARAT SARKAR
MINISTRY OF RAILWAYS
RAILWAY BOARD
New Delhi
No: 2008/RS(G)/777/l Date:05.09.2017
The General Manager,
All Indian Railways/PUs,
55
NF(C), CORE
The DG/RDSO/ Lucknow &
NAIR/Vadodara
CAOs, DMW/Ratiala', WPO/Patna,
COFMOW/N. Delhi, RWP/Bela
Sub: Evaluation of offers under GST Regime
1.After implementation of GST Act, various
representations have been received from
the field units and vendors, regarding
evaluation of offers under GST regime
mentioning that different vendors are
quoting different GST rates for same item
in same tender. The representations have
been examined and the following
instructions are issued.
2.Purchaser may Incorporate HSN number in
the tender document However, it shall be
the responsibility of the bidders to quote
correct HSN number and corresponding GST
rate.
3.Where however, bidders quote different
GST-rates in offers, during transition
phase, following conditions may be
incorporated as part of tender
conditions:
I. The offers shall be evaluated based
on the GST rate as quoted by each
bidder and same will be used for
determining the inter se ranking.
While submitting offer, it shall be
the responsibility of the bidder to
ensure that they quote correct GST
rate and HSN number.
II. Purchaser shall not be responsible
for any misclassification, of HSN
number or incorrect GST rate If
quoted by the bidder.
III. Wherever the successful bidder
invoices the goods at GST rate or HSM
number which is different from that
incorporated in the purchase order;
56
payment shall be made as per GST rate
which is lower of the GST rate
incorporated in the purchase order or
billed.
IV. Vendor is informed that she/he would
be required to adjust her/his basic
price to the extent required by
higher tax billed as per Invoice to
match the all inclusive price as
mentioned in the purchase order.
V. Any amendment to GST rate or HSN
number in the contract shall be as
per the contractual conditions and
statutory amendments in the quoted
GST rate and HSN number, under SVC.
4.Determination of transition period may be
arrived at by the Zonal
Railway/Production Unit.
5.Tender cases already finalized need not
be reopened.
6.This is issued with the concurrence of
Finance Directorate of the Railway Board.
Sd/-
(Santosh Mittal)
Dy. Director Railway Stores (G),
Railway Board”
45. The Communication, no doubt, indicates that the
purchaser may incorporate HSN Number in the tender
document. While the use of the word ‘may’ in a statute
is capable of being interpreted as mandatory and
assuming that we can apply such a principle to a
circular we would hold that having regard to the
context, the consequences that follow, the tax regime
57
and the public interest, a mandatory duty cannot be
spelt out. On the one hand, the writ petitioner would
draw support from the same to contend that all that the
High Court has done is to direct the appellants to
implement the communication issued by the Railway Board
itself. On the other hand, learned ASG would lay
emphasis on the word ‘may’. He would also draw
attention to the next following sentence and emphasised
that it is responsibility of the bidder to quote the
correct HSN number and corresponding GST rate.
46. We are of the view that when read in a holistic
manner, the purport of the Railway Board is that it is
the responsibility of the bidder to quote the correct
HSN Number and the corresponding GST rate. We have
already unravelled the true scope of the relevant
Clauses and wide range of results that would follow on
its true construction. It may be true that the circular
permits the purchaser to indicate the HSN Number. The
purchaser may indicate it. That is a far cry from
holding that the communication enshrines a public duty
which can be enforced by way of Mandamus. While it is
true that in a given case, when a Public Authority is
58
vested with a discretionary power under a Statute, it
can be directed to exercise a discretion, it may not
be legal to direct even a statutory functionary to
exercise the discretion in a particular manner. The
very idea of a discretionary power would suffer
annihilation, if it ceases to be discretionary in the
hands of a Court ordering a Mandamus. No doubt, there
may be cases where the facts are such that the court
is not powerless to direct the Authority to do a thing
which it considers absolutely necessary and just and
legal to perform the act even when the Authority seeks
shelter on the basis that what is conferred on it, is
a mere discretion. The other terms of the circular
clearly appear to indicate that the rate even if
indicated by the appellants will not detract from the
tenderers quoting the rate which is up to them. It is
the rate quoted by the tenderers which governs. It is
the same which will be used to carry out the ranking.
The other terms also militate against a public duty
with the appellants as directed. The appellant seeks
to protect its best interest as a player in the
commercial field. The clauses are self-evident.
59
47. In this regard, we must not overlook the
consequences of reading the word may in the letter
dated 05.09.2017 as casting a mandatory duty. This
would bring us to frontally face the question of how
the purchaser would go about implementing such a
direction. Sections 96 to 103 of the Central Act, as
also of the State GST Act do provide for the mechanism
of advance ruling. If the purchaser is to include the
HSN Code, there must be a mechanism to give effect to
what is directed by the High Court, viz., “to clarify
the issue with the GST Authorities relating to the
applicability of the correct HSN Code of the product
and thereafter mention in the NIT”. To describe this
as impractical and the direction given being without
bearing in mind the conspectus of the statutory
provisions of the GST Acts, cannot but be correct.
Under the provisions relating to advance ruling, while
it is true that the question which can become the
subject matter of advance ruling includes questions
relating to classification of goods and services, there
is a detailed procedure provided in the matter. The
matter does not rest with the decision of the original
60
Authority. A right of appeal is provided. The matter
may travel to the Supreme Court. The provisions
contemplate powers of a civil court in the matter of
discovery, adducing of evidence etc. In other words,
it is long drawn and elaborate procedure and the
direction to ‘clarify’ with the GST Authorities, as
directed by the High Court, can hardly square with the
cumbersome and elaborate process detailed in the
Chapter relating to the advance ruling. The advance
ruling, we notice, is binding on the applicant
ordinarily. No doubt, it has a wider impact in
circumstances detailed in Section 103(1A). We are at a
loss to further understand how in the name of producing
a level playing field, the State, when it decides to
award a contract, would be obliged to undertake the
ordeal of finding out the correct HSN Code and the tax
applicable for the product, which they wish to procure.
This is, particularly so when the State is not burdened
with the liability to pay the tax. The liability to pay
tax, in the case before us, is squarely on the supplier.
There are adequate safeguards and Authorities under the
61
GST Regime must best secure the interests of the
Revenue.
48. Shri Amar Dave, learned Counsel for the writ
petitioner would contend that the Section 168 of the
Central Act can be understood as the fountainhead of
statutory power, using which, the appellants can comply
with the impugned direction. The power is vested with
the Board, it is pointed out. The appellants have
floated a global tender. It means that the bidders can
be located at any place. The Officers, who would be the
Jurisdictional Officers of the bidders, may not even
be known to the appellant.
It is difficult to accept the case of the writ
petitioner that appellants must seek the
‘clarification’ contemplated in the impugned Judgment
by resorting to Section 168 of the Central Act or the
State Act. Section 168 does not expressly provide for
right to any person to seek a direction as contemplated
therein. Further, we may notice that there is an
express power provided in the provisions relating to
advance ruling. There is an elaborate procedure to be
followed and even right of appeal. At any rate, power
62
under Section 168 is essentially meant for officers to
seek orders, instructions or directions besides the
Board itself on its own passing orders, in the interest
of maintaining uniformity in the implementation of the
Act.
49. We cannot ignore the case of the appellant that
the Circular cannot bind the supplier and the Circular
can be challenged in an appropriate proceeding.
Appellants contend that it does not represent a final
view, and does not bind the court and a circular which
is in the teeth of the statute can have no existence
in law. In this regard our attention is drawn to the
judgment of this Court in (2008) 13 SCC 1. It is
further contended that the circular cannot bind the
appellants who are only purchasers of the product.
There is no duty cast on the Board under the Central
Act or on the Commissioner under the State Act to issue
any clarification, as directed in the impugned
Judgment. There is no duty cast on the appellants to
seek such direction. Therefore, the appellants are
right in contending that there is no statutory duty,
which could have been enforced in the manner done in
63
the impugned Judgment. There is no public duty which
is enforceable.
THE CUSTOMS INVOICE DATED 21.03.2017
50. As far as the reliance placed on a customs invoice
dated 21.03.2017, it is pointed out on behalf of the
appellants that the importer on its understanding,
entered the rate (18%). Proceeding on the basis that
it was a unit of the railways, this by itself cannot
bind the appellants to comply with the impugned
judgment. The nature of the clauses and the liability
to pay tax detract from the appellants being bound,
particularly in the absence of any public duty. We
agree with the appellants.
THE CASE OF THE SECOND RESPONDENT (L1)
51. The second respondent (L1) has filed a short
Counter Affidavit in this Court. Therein, reliance is
being placed on Sections 59 and 60 of the CGST. While,
Section 59 provides for self-assessment by a registered
dealer, Section 60, contemplates a dealer making a
request to the proper Officer, in writing, giving
64
reasons for payment of tax on a provisional basis,
thus, leading to the tax being permitted to be paid on
such rate as is specified by the Officer. According to
L1, the Officer can determine the rate of tax. Thus,
any bidder who would be the supplier of goods or
services, is provided with a mechanism to enter the
correct rate of tax in the bid. L1 has a case that the
product in question falls squarely under Chapter 86 of
the GST Tariffs and, therefore, the rate quoted by L1
was correct. It is further contended that the Writ
Petition was filed with delay. Second respondent even
alleges collusion between the appellants and the writ
petitioner and contends that the case is meant only to
defeat the right of L1. The second respondent (L1)
would contend that the appeal deserves to be allowed.
52. In this case, the second respondent has been found
to be L1 for 593 pieces of turbo wheel impeller balance
assembly. We see from the Counter Affidavit, filed in
the High Court, by the appellants, that it was, inter
alia, contended that the tendered product is Turbo
Wheel Impeller Assembly and not Turbo Super Charger.
In the Rejoinder Affidavit, filed by the writ
65
petitioner, we noticed at page-764 onwards of the SLP
Paper Book that the writ petitioner has joined issue
and contended that the stand of the appellants in the
Counter Affidavit was without appreciating that the
product is the most integral part of Turbo Charger,
without which, the Turbo Charger is rendered
commercially redundant. The end item is a Turbo
Charger, which houses the Impeller Wheel Assembly and
is not an associated product but rather a component of
Turbo Charger itself. We further notice the specific
stand of the writ petitioner that in the light of the
fact that the functionality and commercial purpose of
both these products are the same, they have to be
classified under the same Head and taxed at 18 per
cent. A Chartered Engineers’ Certificate was produced.
So was the diagram. In fact, having regard to the nature
of the dispute about the product, it brings into sharp
focus, the complex nature of the problem, which appears
to have been oversimplified in the matter of issuing
the impugned direction. We have already noticed that
the second respondent (L1) projected this dispute, even
in this Court as well.
66
MAKE IN INDIA; ORDER DATED 15.06.2017
53. As far as the ‘Make in India’ Policy is concerned,
relied upon by the writ petitioner, which is dated
15.06.2017, it is, no doubt, true that it is a very
significant move by the Government to promote the
manufacture of goods and services in India, thereby
effectively dealing with the problem of unemployment
and increasing the income of its people. There is no
dispute also that the writ petitioner is an approved
local supplier within the meaning of the Order. It is
equally true that a preference is contemplated for
local suppliers as defined in the Order. The margin of
difference between L1 and the local supplier cannot
exceed 20 per cent. It is also not in dispute that on
the basis of the total price quoted, the margin of
purchase preference is much more than 20 per cent. The
contention of the writ petitioner is that the rights
of the writ petitioner under the Government Order stand
frustrated on account of L1 to L3 quoting the tax rate
at 5 per cent. Emphasis was placed on the definition
of the word ‘local content’. The words ‘local content’
is defined as follows:
67
“'Local content' means the amount of
value added in India which shall, unless
otherwise prescribed by the Nodal
Ministry, be the total value of the item
procured (excluding net domestic indirect
taxes) minus the value of Imported
content in the item (including all
customs duties) as a proportion of the
total value, in percent.”
54. The contention of the writ petitioner is that
unless the appellant found out the correct HSN Code and
also the tax rate applicable for the product, the local
content, as defined in the Order, could not be
determined. This was countered by the learned ASG by
pointing out that the definition of the word ‘local
content’ excludes the ‘domestic indirect taxes’. In
this connection, we may also notice the definition of
‘L1’. ‘L1’ has been defined as meaning the lowest
tender or the lowest quotation, inter alia, as adjudged
in the valuation process as per the tender or other
procurement solicitation. Thus, L1 is, undoubtedly, to
be determined, based on the terms of the tender.
55. In the definition of the word ‘local content’, it
may be true that, when the value of the imported content
in the item is calculated, all the customs duties must
68
be included. The claim of the writ petitioner is that,
when the HSN Code, for the purpose of calculating the
custom duty, is to be found out for determining the
local content, then, there can be no reason to not
include the HSN Code for the item for the purpose of
GST. We are unable to agree. Proceeding on the basis,
that for determining the local content, the HSN Code
of the item, for the purpose of custom duty, is to be
found, that may not justify the writ petitioner from
contending that the HSN Code for the GST must be
included in the tender conditions. This is for the
reason that, apart from the absence of any duty with
the appellants to indicate compulsorily the HSN Code,
we would have to overlook the operation of the terms
of the tender. Under Clause 2.9.2, we have noticed that
a tenderer can make his bid without adding any tax
component. It is open to the bidder, wholly or partly,
to absorb the tax effect. In other words, being an
indirect tax, while it is open to a bidder to pass it
on to the buyer (the appellant), nothing stands in the
way of the bidder, partly or wholly, absorbing the tax.
The liability to pay the tax under the GST regime is
69
with the supplier unless it falls under Section 9(3)
of the GST Act. Further, the appellants cannot declare
a GST rate and make it binding on the bidder. The
correctness of the Code/rate can, at best, be the
appellants understanding of the same. This is why, in
the Circular dated 05.09.2017, issued by the Railway
Board, it conferred a discretion on the purchaser, to
incorporate the HSN Number in the tender document. This
is carefully conditioned by the caveat that, the
responsibility to quote the correct HSN Number and
corresponding GST rate, is to be on the bidder. Still
further, the Railway Board has contemplated that during
the transition phase, it was to be provided that offers
will be evaluated, based on the GST rates quoted by
each bidder and the same will be used for determining
the inter se ranking. When a successful bidder invoices
the goods with the GST rate or HSN Number different
from that incorporated in the purchase order, payment
is to be made at the rate, which is lower of the GST
rate, as between what is incorporated in the purchase
order or the invoice. It is further made clear in the
Circular dated 05.09.2017 that if a higher tax rate is
70
billed and an all-inclusive price is mentioned in the
purchase order, then, the basic price would have to be
accordingly adjusted to make it in conformity with allinclusive price.
56. We cannot therefore hold that in view of the Make
in India policy as contained in the order dated
15.06.2017, there is duty to declare the HSN code in
the tender and what is more, make the tenderers quote
the rate accordingly.
57. Unless Clause 2.9.2 is done away with (it must be
remembered that there is no challenge to Clause 2.9.2),
the tenderers would be free to quote a lumpsum rate
without including the tax rate. The further and more
important obstacle is the mechanism or rather the
absence of the same by which the purchaser of goods and
services (the appellants) can be compelled to ascertain
the correct HSN Code. The direction by the High Court
is to clarify with the Tax Authorities. We have noticed
that there is no provision for clarification, as such.
The only provision which clearly deals with
classification is provision for advance ruling. We have
noticed the nature of the procedure in the Chapter
71
dealing with advance ruling. We would have to assume
that the appellants will be compelled to go through the
said cumbersome procedure and, at the end of it,
proclaim the HSN Code. The appellants purchase several
goods and services. Each time, the appellants purchase
goods and services or both, if the impugned Order is
to be sustained, the appellants would have to resort
to the prolonged proceedings in a matter where the
appellant had no liability to pay the tax. All of this
is premised on the writ petitioner’s quest for the
perfect level playing field. That apart, we have also
noticed, how the interests of the appellant, which it
pursues as an actor in the commercial world, but
wearing the mantle of State obliging it to act fairly,
would not empower the Court in judicial review to
mandate for a duty, not supported by any Statute, the
terms of the bidding document and any other binding
instrument. We have already found that Circular dated
05.09.2017, issued by the Board, does not provide for
the mandatory duty to specify the HSN Code.
72
OTHER TENDERS BROUGHT OUT BY OTHER UNITS OF THE
RAILWAYS CONTAINING THE HSN CODE
58. In this regard it is contended by the appellants
that as far as the tenders relied upon by the writ
petitioner produced in the counter affidavit as having
been brought out wherein the HSN code is indicated,
they are tenders issued by the other units of the Indian
Railways. Since the first appellant is the Union of
India, we would expect that if it is otherwise
permissible to sustain the impugned judgment, it may
not be fair to not have a uniform policy in the matter
of award of largesse by the various units under it.
However, the appellants do point out that even in the
tenders which have been brought out, the HSN Code
mentioned in the tender is shown as indicative only.
It has been provided in the tenders relied upon by the
writ petitioner that it will be the responsibility of
the bidder to quote the correct HSN Code and the
corresponding GST rate while submitting the offer. We
may notice the relevant clause:
“A. 1. HSN number mentioned in tender 8504 is
indicative only. It will be responsibility of
the bidders to quote correct HSN number and
73
corresponding GST rate while submitting offer.
2. Even if bidders quote different GST rates
in offers, the offers shall be evaluated by
IREP3 system based on the GST rate as quoted
by each bidder and same will be used for
determining the inter se ranking. Bidders may
note that I. It shall be the responsibility of
the bidder to ensure that they quote correct
GST code and HSN number. II. Purchaser shall
not be responsible for any misclassification
of HSN number or incorrect GST rate if quoted
by the bidder. III. Wherever the successful
bidder invoices the goods GST rate of HSN
number which is different from that
incorporated in the purchase order, payment
shall be made as per GST rate which is lower
of the GST rate incorporated in the purchase
order or billed. IV. Any amendment to GST rate
or HSN number in the contract shall be as per
the contractual conditions and statutory
amendments in the quoted GST rate and HSN
number, under SVC. B. Are you eligible for
availing benefits and preferential treatment
extended to Micro and Small Enterprises (MSEs).
If so, the necessary documents as per special
conditions for MSEs for claiming benefits and
preferential treatment extended to MSEs to be
attached. C. In case the successful tenderer
is not liable to be registered under CGST/
IGST/ UTGST/ SGST Act, the railway shall deduct
the applicable GST from his/their bills under
Reverse Charge Mechanism (RCM) and deposit the
same to the concerned tax authority. D.
Performance statement of orders received and
supplies made for last three years for subject
item is must for all tenderers including
approved sources.”
74
59. Having regard to the terms, we cannot cull out a
public duty to provide for the correct HSN code.
Therefore, we cannot support the impugned judgment
based on the issuance of tenders as contended.
REVERSE CHARGE MECHANISM
60. We have noticed that the appellants have contended
that the liability to pay the GST, an indirect tax,
lies with supplier of goods and services. The exception
which is admitted by the appellants is in cases covered
under Section 9(3) of the GST Act which provides for
reverse charge mechanism. Under the reverse charge
mechanism, the liability to pay tax is on the recipient
of the goods or services or both. This would indeed
mean that if the appellants are in the shoes of persons
who become liable as recipients of goods and services
or both under Section 9(3), then it will be the
liability of the appellants to pay such tax. Strictly
speaking this question does not appear to arise on the
facts. At any rate, we do not see how the writ
petitioner can advance its case on the basis of this
aspect as it is essentially the look out of the
75
appellants. We must not be oblivious to the fact that
the complaint of the appellant is the denial of a level
playing field among the tenderers. It is obvious that
the appellants as purchasers of the goods and services
are obliged to purchase the goods and services which
are otherwise compliant with the tender conditions at
the cheapest rate. In a case where it is liable under
revere charge mechanism, it would be the look out of
the appellant in public interest to ensure that it will
end up purchasing goods at the cheapest rate possible.
It is elementary that even the lowest bidder would not
have right to have his bid accepted and is always open
to the appellants in public interest and in accordance
with the tender condition to reject even the lowest
bid. No doubt if the tax rate in such a case is
separately insisted upon, then on the rate acceptable
to the appellants, the gross outflow can be calculated
consisting the amount to be paid to the successful
tenderer and the amount to be remitted to the revenue.
In this regard, we notice from the tender condition
relied upon by the writ petitioner which we have
extracted at paragraph 58, what is contemplated is that
76
the amount would be deducted at the applicable GST rate
from the bill under the Reverse Charge Mechanism and
deposited with the concerned tax authority. If under
the terms of the tender, what is contemplated is that,
in a case where the tax component is not included or
it is included at a lower rate, the appellants are
entitled to deduct the actual rate of tax as payable
by it under the Reverse Charge Mechanism and the tender
of such a person is accepted being the lowest tender,
then there can be no question of public interest being
prejudiced. If on the other hand, the tax rate is
included and the clause provides for deduction of the
actual rate from the bill, then also public interest
may not be affected. This is all the more reason for
the tenderer specifically including the tax component
indicating the correct rate of tax. This is a matter
where the first appellant can consider giving
appropriate instructions.
61. The upshot of the above discussion is that, we find
that the appellants have made out a clear case for our
interference with the impugned Judgment. There remains,
however, one aspect. It is the case of the appellants
77
that the supplier of the goods and services, i.e., the
successful tenderer is, indeed, liable to pay the GST
by filing returns and carrying out self-assessment.
There is also no dispute that it is the Officer, dealing
with the supplier, who would have jurisdiction in the
matter. In the said circumstances, in order to also
ensure that the successful tenderer pays the tax due
and to further ensure that, by not correctly quoting
the GST rate, there is no tax evasion, we would think
it is necessary to direct that, in all cases, where a
contract is awarded by the appellants, a copy of the
document, by which, the contract is awarded containing
all material details shall be immediately forwarded to
the concerned jurisdictional Officer. It is accordingly
ordered. Towards this end, the appellants shall
indicate that the tenderers will, in their bids,
indicate the details of their Assessing Officers so
that the appellants can effectively comply with this
direction. The Union of India and the Railway Board
shall ensure that this direction shall be complied with
by all units.
78
62. The appeal is allowed, impugned judgment is set
aside and we further direct that the appellants will
comply with the directions given in paragraph-61 of
this Judgment. There is no order as to costs.
……………………………………………J.
[K.M. JOSEPH]
……………………………………………J.
[HRISHIKESH ROY]
NEW DELHI
DATED; AUGUST 16, 2022

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