2025 (5) TMI 1446 - SC - Indian Laws

Validity of prerequisite conditions stipulated in a tender notice - Auction notice for long term lease -due date for filing the Income Tax Return - compliance of Sections 139(1) and 44AB - condition to ascertain and assess the financial capacity and capability of the bidder - liability to pay GST - furnishing a certificate/letter from the concerned GST Jurisdictional Officer - HELD THAT - Admittedly the petitioner had submitted the requisite documents along with his income tax return. Tahsildar for his satisfaction had made an enquiry with the managing partner Shri. G.N. Subrahamanyeswar Rao of M/s. Sri. Venkateswara Constructions. In response to the query made by the Tahsildar the representative i.e. the managing partner submitted certificate of the chartered accountant. It was clarified in the certificate that the due date of filing of audited balance sheet and profit and loss account for financial year 2021-22 is 30th September 2022 and the due date of filing of IT return is 31st October 2022. It was then submitted that the income tax return for the financial year 2020- 21 may be treated as previous year income tax return. A support was taken to the provision namely Section 44 AB of Income Tax Act 1961 which state that in case of partnership firm whose turnover was more than Rs. 1 crore the due date of filing audited balance sheet and profit loss account for the year 2021-22 is 30th September and the due date of filing ITR is 31st October 2022. The requisite amount of income tax return of the assessment year 2021-22 submitted by the petitioner is in consonance with the income tax circular of Government of India and was also in accordance with the tender requirement. The second condition in respect of furnishing certificate/letter from the concerned GST Jurisdictional Officer that no GST dues are pending is also complied with by the petitioner. Accordingly the certificate was issued with the statement that the certificate is not valid in case of any liability arises for the said period and at the time of scrutiny of details. The Tahasildar on his satisfaction that the petitioner has complied both the conditions he was declared as a successful bidder. Needless to state that the intention of laying down such condition is to ascertain and assess the financial capacity and capability of the bidder. As stated above the petitioner has submitted his income-tax returns of the year 2020-21 which shows that the petitioner has the financial capability to participate in the bidding process therefore the income tax return as submitted by the petitioner is sufficient to fulfil the purpose of such condition/requirement of auction notice in assessing the petitioner s financial capability. Admittedly the petitioner was from that category and was entitled to avail the benefit of the notification. Accordingly the petitioner was entitled to file his returns of financial year 2021-22 till 31st October 2022 and this fact was brought to the notice of Tahasildar. Thus the insistence of respondent no. 4 for not submitting the income-tax return for the year 2021-22 was clearly untenable and resultantly the submission that the petitioner failed to comply with the prerequisite condition is unsustainable. In so far as the other condition is concerned the petitioner has submitted the communication issued by the GST officer revealing that there are no dues against the successful bidder merely because there is a rider attached to it the same would not ipso facto lose the sanctity of the certificate issued by the GST officer in favour of the petitioner. Thus considering the material placed on record we are of the clear opinion that the submissions made on behalf of respondent no.4 is not sustainable for the simple reason that the Tahasildar was satisfied on the aspect that the petitioner had complied with both the conditions and there was no need for the him to further wait for some approval and delay the process. Another aspect which is also worth consideration is the bid quoted by the petitioner was much more than the respondent no.4 and by way of accepting the tender of the petitioner the state exchequer could have been benefitted and there was no reason for the revenue authorities i.e. the Tahasildar and the Sub-Collector to turn down the bid of the petitioner. However by accepting the bid of respondent no.4 there could have been a loss to the public ex-chequer. Thus considering all these aspects we are of the opinion that the decision of the revenue authorities namely the Tahasildar and the Sub-Collector were just and the High Court committed gross error in allowing the petition. Resultantly the appeals are allowed. The order impugned is quashed and set aside.

Summary

The core legal questions considered in this case revolve around the validity and interpretation of conditions stipulated in a tender notice for the long-term lease of a minor mineral quarry, specifically:

1. Whether the submission of the Income Tax Return (ITR) for the previous financial year, as required by the tender condition, must strictly be for the financial year immediately preceding the tender or whether the latest available ITR, even if for an earlier year due to statutory filing deadlines, suffices.

2. Whether the certificate or letter from the concerned GST jurisdictional officer stating no GST dues pending, as mandated by the tender, must be in a specific statutory format or whether alternative forms such as a certificate issued on request or information downloaded from the GST portal are acceptable.

3. Whether the tendering authority's process of verification and acceptance of documents, including reliance on clarifications provided by the bidder's representatives, was lawful and reasonable.

4. Whether the High Court was justified in setting aside the tender award and directing a fresh tender on grounds of alleged non-compliance and procedural irregularities.

5. Whether the principles of judicial restraint in interference with tender decisions were properly applied.

Issue 1: Compliance with Income Tax Return Submission Requirement

The tender condition required bidders to submit the Income Tax Return of the previous financial year showing annual income not less than the royalty and additional charge payable. The petitioner submitted the ITR for financial year 2020-21 (Assessment Year 2021-22), whereas the tender notice was issued in July 2022, requiring the ITR for financial year 2021-22.

The legal framework includes the Income Tax Act, 1961, specifically Sections 139(1) and 44AB, which establish due dates for filing tax returns and audited accounts. For partnership firms with turnover exceeding Rs. 1 crore, the due date for filing audited balance sheets and profit & loss accounts for FY 2021-22 was 30th September 2022, and the due date for filing the ITR was 31st October 2022.

The Tahasildar, acting as the tendering authority, accepted the petitioner's submission of the ITR for FY 2020-21 as the latest available return, supported by a certificate from the petitioner's Chartered Accountant explaining the statutory due dates. This interpretation was reasoned as aligning with the Income Tax Act and ensuring fairness to bidders subject to tax audit requirements.

The High Court, however, held that the tender notice explicitly required the ITR for FY 2021-22 and that the petitioner had failed to comply. It also noted that the Tahasildar had not awaited clarifications from the concerned authorities before finalizing the tender.

The Supreme Court rejected the High Court's strict literal interpretation, emphasizing the statutory filing deadlines and the practical impossibility of filing the FY 2021-22 ITR by the tender deadline. The Court held that the petitioner's submission satisfied the financial capacity requirement and that the tendering authority's acceptance was reasonable and in line with the law.

Issue 2: Compliance with GST No Dues Certificate Requirement

The tender notice required bidders to furnish a certificate or letter from the concerned GST jurisdictional officer confirming no pending GST dues. The petitioner submitted a certificate issued by the Superintendent of Central GST & Central Excise, which contained a rider stating that it was conditional and might be invalidated if liabilities arose during scrutiny.

The respondent no. 4 submitted only a printout from the GST portal indicating no dues, which was rejected by the Tahasildar as not constituting a valid certificate or letter from the authority.

The High Court found that the petitioner's certificate was not a statutory certificate and was conditional, thus insufficient. It also noted that the petitioner downloaded GST information from the website after being advised to do so by the GST authorities, which was considered compliant.

The Supreme Court found that the petitioner's certificate, despite the rider, was valid and sufficient to fulfill the tender condition. The Court held that the mere presence of a disclaimer did not negate the certificate's sanctity. Conversely, the respondent no. 4's submission of a portal printout was inadequate as it lacked official certification and verification.

Issue 3: Lawfulness and Reasonableness of Tender Verification Process

The respondent no. 4 challenged the tendering authority's process, alleging that the Tahasildar acted prematurely and without proper verification from relevant departments, relying instead on clarifications from the petitioner's Chartered Accountant, which suggested bias and mala fide conduct.

The High Court agreed with this contention, noting that the tender committee's endorsement indicated the need for clarifications and that the tender was finalized without awaiting such confirmations.

The Supreme Court examined the tender process and found that the Tahasildar conducted on-the-spot verification and was satisfied with the documents submitted. It noted that no specific standard or degree of verification was prescribed by the tender notice or rules, and that the Tahasildar's acceptance of the petitioner's documents was reasonable. The Court emphasized that the tendering authority is entitled to interpret and verify documents within its discretion, and there was no evidence of arbitrariness or mala fide.

Issue 4: Validity of High Court's Quashing of Tender and Direction for Fresh Tender

The High Court quashed the tender award and directed a fresh tender on grounds of non-compliance with tender conditions and procedural irregularities.

The Supreme Court disagreed, holding that the High Court erred in substituting its own interpretation and interfering with the tender process without sufficient grounds. The Court underscored the importance of judicial restraint in matters of tender and contract awards, particularly where the tendering authority has acted within the scope of the law and rules.

The Court noted that the petitioner's bid was the highest, which would benefit the public exchequer, and that the respondent no. 4's bid was deficient in compliance. The Court held that the High Court's order caused undue prejudice to the petitioner and disrupted the tender process unjustifiably.

Issue 5: Application of Principles of Judicial Restraint in Tender Matters

The petitioner relied on established Supreme Court precedents emphasizing that courts should not interfere with tender decisions unless there is clear arbitrariness, irrationality, mala fide intent, or violation of statutory provisions. The Court reiterated that deviations from tender conditions are permissible if applied equally and that judicial review is limited to lawfulness rather than the wisdom or soundness of administrative decisions.

The Supreme Court applied these principles, finding no legal infirmity or malafide in the tendering authority's decision and thus reversing the High Court's interference.

Significant Holdings:

"The requisite amount of income tax return of the assessment year 2021-22 submitted by the petitioner is in consonance with the income tax circular of Government of India and was also in accordance with the tender requirement."

"Merely because there is a rider attached to [the GST certificate], the same would not ipso facto, lose the sanctity of the certificate issued by the GST officer in favour of the petitioner."

"The intention of laying down such condition is to ascertain and assess the financial capacity and capability of the bidder. As stated above, the petitioner has submitted his income-tax returns... which shows that the petitioner has the financial capability to participate in the bidding process, therefore, the income tax return as submitted by the petitioner is sufficient to fulfil the purpose of such condition/requirement of auction notice in assessing the petitioner's financial capability."

"The decision of the revenue authorities namely the Tahasildar and the Sub-Collector were just, and the High Court committed gross error in allowing the petition."

"The employer's determination of essential tender terms must be respected and is not subject to judicial scrutiny unless the decision is arbitrary, irrational, mala fide or biased."

In conclusion, the Supreme Court upheld the tendering authority's acceptance of the petitioner's bid, finding that the petitioner complied with the tender conditions in a reasonable manner consistent with statutory deadlines and that the GST certificate submitted was valid. The Court found no procedural impropriety or mala fide in the tender process. The High Court's order setting aside the tender and directing a fresh tender was quashed, and the appeals were allowed.