TMI Blog2020 (12) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ly developed along with the tender documents. The opening of the subject tender, in the instant case, may not be possible as the offer period has expired due to the interim order passed by this Court. Further with the subsequent tender for procurement of the product, namely 'Turbo Wheel Impeller Balance Assembly' having been granted to the petitioner, the prayer nos.2 and 3 of the writ petition have been rendered infructuous. Flaw in the procedure adopted by the Railways in the tendering process - petitioner is aggrieved by the fact that after opening of the financial bids, the ranking of bidders was done on the total price (all inclusive price), which was arrived at by adding base price and GST rate (GST value) - HELD THAT:- The Court cannot examine the details of the terms of the contract which has been entered into by the public bodies or the State. The Courts have inherent limitations on the scope of any such enquiry. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r GST rate, it would then be the duty of respondent nos.1 and 2 to seek clarification from the GST authorities. Petition disposed off. - WRIT - C No. - 17620 of 2019 - - - Dated:- 18-12-2020 - Hon'ble Mrs. Sunita Agarwal And Hon'ble Jayant Banerji JJ. For the Petitioner : Prashant Shukla,Anurag Khanna (Senior Advocate) For the Respondent : Rishi Kumar,Rajnish Kumar Rai,Udayan Nandan ORDER Heard Shri Kavin Gulati, learned Senior Advocate assisted by Shri Prashant Shukla and Ankur Sehgal, learned Advocates for the petitioner; Shri Shashi Nandan, learned Senior Advocate assisted by Shri Udayan Nandan and Shri Ajay Sondhi, learned Advocates for the respondent no. 6 and Shri Rajnish Kumar Rai, learned Advocate for the respondent nos. 1 to 5 (Railways). The petitioner herein is a company registered under the provisions of the Indian Companies Act having its registered office at Pune Cantonment, Mundhwa, Pune, Maharashtra. The respondent no.1, Diesel Locomotive Works, Varanasi published a notice dated 11.4.2019 inviting e-tender for procurement of Turbo Wheel Impeller Balance Assembly to D.L.W Part no.16080385. The Turbo Wheel Impeller Balance Assem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Financial Rules 2017 issued by the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Government of India. The relevant provisions of the Public Procurement Order, 2017 are as under:- 2. Definitions:- For the purpose of this Order: '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. 'Local supplier' means a supplier or service provider whose product or service offered for procurement meets the minimum local content as presecribed under this Order or by the competent Ministries/Departments in pursuance of this order. 'L1' means the lowest tender or lowest bid or the lowest quotation in a tender, bidding process or other procurement solicitation as adjudged in the evaluation process as per the tender or other procurement solicitation. 'margin of purchase preference' means the maximum extent to which the price quoted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues are as under: (a) Local content: The minimum local content shall ordinarily be 50% PHOD/CHOD of procuring department (Stores/Engineering), in consultation with indenting department shall however be competent to vary the minimum local content below the prescribed level on case to case basis. Requisite action as per para 14 of the subject order, shall be ensured. Such power should not be further delegated. (b) Margin of Purchase Preference: The margin of purchase preference shall be 20%. The contention of the learned senior counsel for the petitioner is that a comprehensive reading of the Make in India policy; circular issued by the Railway Board and the tender document indicates that the bidders, including the petitioner herein were required to specify the percentage of local content in the material being offered in accordance with the Make in India Policy noted above. The special conditions, inserted in the tender document, further provides that preference to 'Make of India' will also be applicable to the subject tender. The Union of India had issued directions to all ministries, Departments C.P.S.Us that in all procurements, preference shall be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated wrong rate of 5% for payment towards GST which has resulted in placement of the petitioner as L-4. It is further contended that the GST rates of the products and services have been duly clarified/fixed by the Goods and Services Tax Council, using the Harmonized System of Nomenclature (HSN) Codes for each product/service, to specify the rates at which GST would be applicable. The contention is that the procurement product would fall under Chapter 84 of the GST Tariff of India declared by the GST Council and HSN Code 84148030 is relevant for Turbo charger , or the Procurement Product, which is chargeable at 18% GST. The relevant extract of Chapter 84 of the GST Tariff on Goods, as released by the GST Council, is appended as Annexure-'7' to the writ petition. It is pointed out that neither the NIT (Notice inviting tender) nor the tender document published by respondent no.1 mentioned the relevant HSN code applicable to the procurement product. It appears that the respondent no.6 has quoted the HSN Code of the products to be supplied to the Railways under Chapter 86, instead of Chapter 84, attracting HSN Code of 8602 series, for which GST is levied at 5% of the base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of the Tender a nullity, and issue a Writ of Mandamus, directing the Tendering Authority, i.e. Respondent no.1, to invite fresh bids with the HSN Code duly specified; (iv) a writ order or direction in the nature of mandamus commandaing and directing the 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%. It is, thus, vehemently contended by the learned senior counsel for the petitioner that the petitioner who is the only local manufacturer of the procurement product has been unfairly and unjustly prevented from availing the benefit and the preference under the Make in India policy. The product offered by the petitioner in the subject tender being 97.68% indigenuously developed has been recognized by the respondent nos.1 and 2, which has led to inclusion of the petitioner herein to the 'approved vendor list' prepared by the respondent nos.1 and 3. It is submitted that the respondent no.1, the tendering authority, has the responsibility to provide a level-playing field of all bidders/tenderers by mentioning the HSN Code fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance Assembly' is an integral part of 'Turbo super charger' and not Turbo charger as stated by the petitioner. The Turbo super charger being a Railway locomotive part falls under Chapter 86 of GST handbook of Tarrif issued by the GST Council and as such the applicable rate of GST on the aforesaid product is only 5% and not 18%. The contention of the petitioner that GST @ 18% is applicable on the procurement product is, thus, false. The petitioner itself has quoted GST @ 5% for the same procurement product in the tender bearing no. 101710860 which was opened on 24.7.2019. Even otherwise, the rate quoted by the petitioner does not fall within 20% margin of the purchase price and as such it is not entitled to be given the benefit of being the local supplier under the Make in India Policy, in the subject tender. Sri Rajnish Kumar Rai learned Advocate for respondent nos.1 to 5, on the other hand, insists that the tabulated statement of financial bids prepared by the tendering authority/respondent no.1 is based on GST rates and basic rates of procurement product, as quoted by the tenderers. It is the responsibility of the tenderers to quote correct rates and statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has left with no enforceable right. Moreover, a subsequent tender no.101810202 for procurement of 'Turbo Wheel Impeller' floated on 22.2.2019, which was subject matter of challenge in writ petition no.8225 of 2019 (M/s New Tech UOI ors), was opened on 25.10.2019 after final decision in the said writ petition on 1.10.2019. It was secured by the petitioner company being L-1, lowest approved source bidder. In the subsequent tender also, HSN code and SGT rates were not mentioned and no objection was raised by the petitioner. In fact, the tenderers/bidders have to adjust their base price according to the GST rates to match all inclusive price as mentioned in the purchase order. All the prayers in the present writ petition, therefore, have become infructuous. The writ petition is liable to be dismissed as such. On behalf of the petitioner, in rejoinder, it is submitted that the denial on the part of the respondent no.1 to mention correct GST Code in the tender document not only lead to payment of lesser tax (GST) to the concerned department but also resulted in refusal to provide a 'level playing field' to the tenderers/bidders. As per the condition in the tender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... margin of purchase preference for more than 20%. The petitioner could get benefit of Make in India Policy being the local manufacturer, only if the margin of purchase preference was less than or upto 20%. The Make in India policy/Public Procurement Order' 2017 was framed to promote manufacturing and production of goods and services in India with a view to generate employment and enhance income. The respondent Railways had arranged ranking of the tenderers/bidders on the total offered price which figure was arrived by adding GST value in the base price. The explanation/stand of respondent no.1 that they are not concerned with GST rates as it is the area of concern of GST authorities and it was the responsibility of the bidders to quote HSN number and corresponding GST rates, is not sound, in as much as, GST value (GST rate) is integral to the tendering process. At this stage, we may note that in the matter of award of contract, scope of judicial review is limited. The parameters for inteference would be arbitrariness, irrationality, unreasonableness, bias and malafide. The purpose is to check whether choice or decision is made lawfully and not to check whether choice or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of non-discrimination . 'Level playing field' is an important concept while construing Article 19(1)(g) of the Constitution of India. When Article 19(1)(g) confers financial right to carry on business to a company, it is entitled to invoke the doctrine of 'level playing field'. It is clarified therein that this doctrine, however, be subject to the public interest. It is said therein as under:- In the world of globalization, 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. Globalization , in essence, is liberalization of trade. Today India has dismantled licence-raj. The economic reforms introduced after 1992 have brought in the concept of globalization . Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of level ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oices to match the all inclusive price as mentioned in the purchase order. The said stand will not change the position at the stage of selection, in as much as, there will be disparity in the total price offered on account of difference in the GST rates quoted by each bidder. The fair competition or 'level playing field', would, therefore, be denied to each bidder as someone may bag the tender by quoting lesser rate of GST (lesser GST value), which may result in substantial difference in the total price offered by bidders/tenderers. The HSN code (Harmonized System of Nomenclature) is provided for each product/service by GST Council to specify the rate at which GST would be applicable. The suppliers have to quote HSN Code of the product to be supplied by them in the tender document, itself. The mentioning of correct HSN Code is necessary to determine the GST rate (GST value) which is to be added in the base price to arrive at the final price offered by the bidder/tenderer. In the case at hand, though the respondent no.6 was ranked as L-1 and the petitioner herein as L-4, but the margin of purchase preference between respondent no.6 (L-1) and petitioner (L-4) became mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. For any issue relating to the applicability of correct HSN Code or GST rate, it would then be the duty of respondent nos.1 and 2 to seek clarification from the GST authorities. The respondent nos.1 and 2 cannot get away by saying that they are not required to mention the GST rate or HSN Code in the tender document, as it is integral to the process of selection of tenderer, moreso, in view of the admission of the respondent no.1 in the counter affdavit that the offers have to be evaluated based on the GST rates as quoted by each bidder and same will be used to determine the interse ranking. 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 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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