Tax Management India. Com
                        Law and Practice: A Digital eBook ...
TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms SMS News Articles
D. Forum
What's New


Article Section
Home Articles Goods and Services Tax - GST Mr. M. GOVINDARAJAN Experts This
← Previous Next →


Submit New Article

Discuss this article

September 25, 2020
All Articles by: Mr. M. GOVINDARAJAN       View Profile
  • Contents

In M/S. SHANTI ENGGICON PRIVATE LIMITED VERSUS NTPC LIMITED, ADDITIONAL GENERAL MANAGER (C&M) / SR. MANAGER (C&M) SHARED SERVICE CENTRE, GENERAL MANAGER, NTPC LIMITED [2020 (4) TMI 63 - CHHATTISGARH HIGH COURT] the notice for inviting tender was issued by the second respondent on 09.09.2019 for Talaipalli Coal Mining Project situated in the Raigarh District of the Stte of Chhattisgarh, which is under the control of third respondent.  The tender was floated for the construction of the road for coal evacuation and road for township approach for Talaipalli Coal Mining Project and road for the township area.   At the time of introduction of GST the GST rate for work contract was 18%.  Subsequent to the amendment dated 22.08.2017 the rate was changed to 12%. 

In the web form of the tender application there is a provision for entry of only one rate of GST.  The tender conditions specifically stipulated that the Probable amount of contract was ₹ 24,32,45,371.37 and that the rate had to be quoted by the bidder by percentage higher or lower including all taxes/duties.    Some of the other conditions stipulated in the tender form are-

  • The bidder shall quote the basis price (including all taxes and duties but excluding GST_ and applicable GST % as asked for in the Bill of Quantities;
  • If the bid was defective in any manner it was to be rejected which will not entail any forfeiture of any EMD as warranted in the case of withdrawal of a bid.
  • The rate to be quoted was excluding GST as the GST had to be quoted separately.
  • The payment of GST was the employer’s liability.
  • If the rate quoted was defective it was open for the employer to add the left over amount and not to have the quote reduced in any manner.
  • If the amount quoted is defective it was to be properly evaluated to fix the bid price and the evaluated bid price had to be declared to identify the L-1 bidder.

Since there are different rates of GST in the work involved in the project and the terms of the tender clearly stipulated that quoting of the bid amount was to be by excluding the GST and further that satisfaction of the GST was always to be the liability of the awarder/employer, the petitioner quoted in the bid at ₹ 18,24,58,353.06 and the column for mentioning the rate of GST was left blank.

The petitioner submitted the document.  After that the petitioner was pointed out on 27.12.2019 having not mentioned the rate of GST, the quote of ₹ 18,24,58,353.06 was treated as inclusive of GST and hence deducting the GST the quote was brought down to R.15,46,25,723 which was noted as below 36.43% of the estimated rate of ₹ 24,32,45,371.32 and hence was branded as ‘abnormally low’.   The petitioner was asked to furnish additional performance security undertaking for providing additional performance security to the tune of ₹ 2,21,54,912/- if the work was awarded to the petitioner.  The petitioner replied that the bid quoted by the petitioner was excluding GST.  A letter dated 08.01.2020 was issued to the petition in which the petitioner was threatened of coercive action and forcing to withdraw the bid with an intent to forfeit the EMD and to blacklist the petitioner from participating in the future transactions.    Therefore the petitioner challenged the said order before the High Court.  The High Court granted interim order of status quo with regard to forfeiture of the EMC till the next hearing. 

The respondents submitted the following before the High Court-

  • The petitioner had failed to quote the rate of GST despite the clear stipulation in this regard.
  • Since the petitioner failed to quote the GST rate the GST had to be carved out from the rate quoted thus reducing the quote from ₹ 18,24,58,353.06 to ₹ 15,46,25,723/- which was far below the estimated price.
  • The writ petition is not maintainable by virtue of lack of territorial jurisdiction as the tender has been issued from Ranchi in the State of Jharkhand.
  • The stipulations in the tender have been correctly understood by the other participants who have submitted their tenders quoting GST specifically.
  • The writ petition is liable to be dismissed as devoid of any merit at all.

The petitioner filed a rejoinder in which the petitioner reiterated the points mentioned in the writ petition.  The petitioner submitted that-

  • The screen shot of the bid submitted by the petitioner online, clearly shows the estimated price of ₹ 24,32,45,371.37 in column No. 6, the entry given by the petitioner as he was quoting less i.e., minus in Column No. 9 and the quote offered in column No. 13 as 24.99% of the estimated value which is without GST.
  • Column 18, in which GST rate is to be quoted, is left blank by the petitioner for the reasons mentioned in the writ petition.
  • Column No. 54 shows the amount quoted by the petitioner as ₹ 18,24,58,353.06 though the heading in the said column as given by the respondent in the web portal is described as an amount with premium/discount and GST.
  • As per the tender conditions, the quote was never to include GST and the rate of GST was to be separately given under Column No. 18.
  • There is no option to the respondents to reduce the GST from the quote of ₹ 18,24,58,353.06 to work out the bid amount of the petitioner.
  • Confusion was there in the minds of other participants in this regard.  One participant quoted 12% whereas the other bidder quoted 18%.
  • Whatever be the rate, it was to be satisfied by the awarder and as such, mentioning of a particular rate by the bidder would never tilt the balance in any manner insofar as his quote is concerned.
  • If the amount quoted was defective in any manner, it was to be added on and the evaluated bid price had to be worked out by the respondents to identify the L-1 bidder.
  • The tender conditions do not provide to reduce the bid amount and hence the action pursued by the respondents was per se wrong and illegal in all aspects.
  • If the bid was wrong and not acceptable or defective in any manner, at best they could have rejected it, under which circumstance, no adverse consequence was to be resulted by way of forfeiture of the EMD or blacklisting of the petitioner.

Regarding to the maintainability of the writ petition, the petitioner submitted that the High Court is having jurisdiction since the cause of action arises (either wholly or partly) in the jurisdiction of this High Court.  The tender conditions stipulate that all disputes shall be subject to jurisdiction of the Courts at Ranchi, it can have operation only when an agreement is executed confining the jurisdiction to that place.  Since there is no agreement has been executed and that stage is still to be reached, the jurisdiction of the Court cannot be ousted in any manner.

The High Court considered the submissions put forth  by the petitioner and the respondent.  The High Court found that there is a force in the submissions of the petitioner.  Clause 12.4 of the tender read with section 9 of the Central Goods and Service Act, 2017, the payment of GST was to be the liability of the awarded and hence, mentioning or non mentioning of the rate of GST was to be of no consequence as it is a ‘constant figure’ with regard to which no alteration can be thought about either by the bidder or by the awarder.  Even if there is a mistake it was open to the respondents to have re-evaluated the bid in terms of clause 23.3 read with clause 23.2.3. of the tender to work out the actual quote and to identify the L-1 bidder.  Without considering these aspects the proceedings were sought to be pursued hastily without considering the explanation/objection raised by the petitioner.

The High Court set aside the impugned proceedings.  It further held that it was still open for the respondents to re-evaluate the bid submitted by all the participants including the petitioner to work out the actual bid amount, if the GST was also to be considered as part of the bid and thus, adding it on, instead of deducting the GST from the bid quoted by the petitioner or such other bidder.  After conducting the re-evaluation the bid proceedings could be finalized, identifying the successful bidder and to have the work awarded accordingly subject to the satisfaction of other requirements in accordance with law.


By: Mr. M. GOVINDARAJAN - September 25, 2020



Discuss this article

← Previous Next →

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Site Map - Recent || Site Map || ||