2018 (12) TMI 69 – GUJARAT HIGH COURT – 2018 (18) G. S. T. L. 795 (Guj.) – Revision of price under bid in view of the change in the tax structure on introduction of GST – It is the case on behalf of the petitioners that at the relevant time when they submitted the bids and quoted the rates which came to be accepted, the GST / CGST was not in existence which came to be introduced subsequently and therefore, in view of the above, they may be permitted to change the rates.
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Whether the respondents are required to be directed to accept the request of the petitioner of price revision in view of the introduction of the GST?
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Held that:- As per Clause 49 of the tender document the claim of price revision of any finished goods under any pretext or reason, including the revision of duty / excise / cost shall not be allowed at any stage after the last date of submission of the tenders. Similar are the conditions of the rate contracts.
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Under the circumstances when the rate contr
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and instead the same is substituted by GST which may be at 12%, the petitioners cannot claim the price revision on the aforesaid ground.
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The grant of any relief as prayed in the present petitions would tantamount to varying terms and conditions of the tender document / rate contracts which in exercise of powers under Article 226 of the Constitution of India shall not be permissible – In the present case, as such the liability to pay GST under the GST / CGST Act is upon the supplier. As observed hereinabove the price quoted and the rate contract was inclusive of all the levies and taxes. Therefore, the petitioners shall not be entitled to the revision of price as sought.
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In the present case the decision taken by the respondent No.2 GMSCL in not permitting the price revision is after due application of mind and even after considering the opinion of the Finance Department, State of Gujarat and a conscious decision has been taken by the Committee which is neither perverse nor
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on behalf of the respondent No.1 and Shri Mitul Shelat, learned Advocate waives service of notice of Rule on behalf of the respondent No.2. [1.1] As common question of law and facts arise in this group of petitions, they are disposed of by this common judgment and order. [2.0] By way of this petition under Article 226 of the Constitution of India, the respective petitioners have prayed for an appropriate writ, direction and order quashing and setting aside the impugned decisions / order of the respondent No.2 – Gujarat Medical Services Corporation Ltd. (hereinafter referred to as GMSCL ) being Email Ref.No.GMSCL/DRUG/201718/ as well as give effect to the change in Tax Structure whereby 12% GST has been introduced on goods that are supplied by the petitioners to respondent No.2 – GMSCL. [2.1] By way of amendment the petitioners have also prayed to quash and set aside the impugned decision of the respondent No.2 – GMSCL being Agenda Item No.22/15 and Agenda Item No.22/25 of the Minutes o
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r: 1. That on 22.07.2015, respondent No.2 GMSCL had invited Online Tenders bearing Tender Notice No.D02/ 20152016 and Tender Enquiry No.GMSCL/D576/ RC/201516 (ON RATE CONTRACT BASIS) from all reputed Manufacturers / Direct importers of Disposable Delivery Kit (ETO Sterilized). That the petitioners had filled the Tender Form for Item Code No.4185 i.e. Disposable Deliver Kit (ETO Sterilized) and had submitted Technical and Commercial Bid for which petitioners were awarded the tender through Acceptance Letter dated 07.10.2015. Rate Contract bearing No.GMSCL / Drugs / RC / 5764185 / C166 /6659666607/ 2015016 was entered on 28.10.2015 which was valid up to 30.09.2016 which came to be further extended up to 31.05.2017. 2. That on 10.11.2015, the respondent No.2 GMSCL had invited Online tenders bearing tender Notice No.D03/ 20152016 and Tender Enquiry No.GMSCL/D582/ RC/201516 (ON RATE CONTRACT BASIS) from all reputed Manufacturers/Direct importers of Cotton Crepe Bandage, absorbable surgical
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No.4024 i.e. Rolled Bandage (5 mtr * 5 cm) with ISI Mark and had submitted Technical and Commercial Bid for which petitioners were awarded the tender through Acceptance Letter dated 23.08.2016 for Item Code 4024 and Acceptance Letter dated 09.09.2016 for Item Code 4006. Rate Contract bearing No.GMSCL / Drugs / RC / 5884006 / D166 / 6853668547 /20162017 for Item Code No.4006 and Rate Contract bearing No.GMSCL / Drugs / RC / 5884024 / D93 /6481564826 / 20162017 for Item Code No.4024 were respectively entered on 28.09.2016 and 06.09.2016 which were valid up to 31.05.2018. [3.2] It is the case on behalf of the petitioners that as per the tender terms, the petitioners were asked to provide rates prepacking unit (without applicable VAT / CST) as well as provide percentage of VAT / CST, if applicable in different columns. According to the petitioners, as per Clause 13(b)9 of the respective tender documents dated 22.07.2015, 10.11.2015 and 17.02.2016 as well as Bidding Schedule attached to th
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ons), Additional Duties of Excise, Additional Duties of Customs, Special Additional Duty of Customs, Service Tax and Central Surcharges and Cess have been subsumed in GST. Similarly, the taxes levied and collected by State such as State VAT, Central Sales Tax, Entry tax, Luxury tax, Entertainment and Amusement Tax, taxes on advertisement etc. have been subsumed in GST. It is the case on behalf of the petitioners that in view of the introduction of the GST and the rate of GST and change in tax structure, on 26.05.2017, the petitioner wrote a letter to the Managing Director of the GMSCL by which the petitioners asked the GMSCL to consider new GST Rates which would be applicable to the product supplied by the petitioners and pay the duty amount, if any. That vide communication dated 14.07.2017, GMSCL had asked the petitioners to provide applicable GST to the products that were supplied by the petitioners to the respondent No.2 GMSCL alongwith HSN Code. That the petitioners replied vide co
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two Agenda Items i.e. Agenda Item No.22/15 titled as Amendment in Rate Contract due to GST and Agenda Item No.22/25 titled as Amendment in Tax due to GST were passed and the GMSCL resolved that since the Finance Department, Government of Gujarat did not agree to revise a rate due to GST effect, the Board decided to seek consent of firms for supply of the items as per rate contract . It was also resolved that if the firms do not agree, the GMSCL will float fresh tender and as per the agreement terms and conditions for the existing rate contract for such items . [3.4] Feeling aggrieved and dissatisfied with the impugned decision in the communication dated 31.08.2017 (AnnexureA) by which the petitioners were requested to make available their consent in connection of agreement to supply as per the GST rates, without increasing the existing rates and the impugned decision taken by the GMSCL in Agenda Item Nos.22/15 and 22/25 by which it has been decided to seek consent of firms for supply o
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.1] It is submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that as such as per the tender conditions the petitioners were asked to provide rates prepacking unit (without applicable VAT & CST) as well as provide percentage of VAT / CST, if applicable, in different columns. It is submitted that as per Clause 13(b)(ix) of the tender documents as well as Bidding Schedule attached to the tender documents, petitioners were required to include Excise Duty, Packing, Forwarding, Insurance Charges etc. in prepacking unit (without applicable VAT / CST). It is submitted that therefore the VAT / CST were to be borne by the GMSCL which although were recovered by the petitioners but was indeed paid to the State Government or appropriate Authority on behalf of the GMSCL. It is submitted that by impugned communication dated 31.08.2017 and the illustration, the GMSCL has forced the petitioner to reduce the contract rate / rates prepacking unit (without applicable VA
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Counsel appearing on behalf of the petitioners that from the illustration provided in the impugned communication dated 31.08.2017, it is evident that the preGST rates have been shown in which basic rate i.e. prepacking unit (without applicable VAT / CST) has been taken as ₹ 100 on which 5% VAT or CST was applicable and the final amount of the product was ₹ 105/. It is submitted that against which postGST rates have been shown in which basic rate that is prepacking unit (without applicable VAT / CST) has been reduced to ₹ 93.74 on which 6% SGST i.e. ₹ 5.63 and 6% CGST i.e. ₹ 5.63 is applied an the final amount of the product is kept at ₹ 105/. It is submitted that however the petitioner is directed to mention the rate at ₹ 93.74 (instead of ₹ 105) which as such was not the agreed contract rate. It is submitted that therefore the impugned decision dated 31.08.2017 is absolutely illegal and contrary to the terms and conditions and the relev
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said to be a decision of the respondent No.2 GMSCL and the same can be said to be the decision of the Finance Department of Government of Gujarat. [5.3] It is further submitted that even otherwise the impugned decision dated 23.08.2017 is absolutely illegal, unreasonable and arbitrary. It is submitted that admittedly when the contract was executed, there was no enactment or statute like CGST / GST and prior to introduction of CGST / GST, the taxes were being borne by the Government. It is submitted that therefore on introduction of CGST / GST, obligation is always cast upon the Government to pay any tax inclusive of the GST. It is submitted that therefore the impugned decisions of CGST in not granting the benefit of change in tax structure, by revising the rate contract, deserves to be quashed and set aside. [5.4] It is further submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that as such at the time when the rates were offered, which were accepted at
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also. [5.6] It is further submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that even otherwise the impugned decisions can be said to be and/or amounts to novation in the contract which may be on change of circumstances more particularly on applicability of CGST / GST. Making above submissions and relying upon decisions of the Hon ble Supreme Court in the case of Zonal Manager, Central Bank of India vs. Devi Ispat Limited and Others reported in (2010) 11 SCC 186 (Para 28); ABL International Ltd. and Another vs. Export Credit Guarantee Corporation of India Ltd. and Others reported in (2004) 3 SCC 553 (Paras 23, 53), it is requested to exercise the powers under Article 226 of the Constitution of India and quash and set aside the impugned decisions. [6.0] Present Special Civil Applications are vehemently opposed by Shri Kamal Trivedi, learned Advocate General appearing on behalf of the State. Shri Trivedi, learned Advocate General has heavily relied upon C
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is no question of permitting the petitioners to change the rate or permit the price revision of the finished goods in view of the aforesaid changed circumstances. It is submitted that even otherwise as per the position prevailing earlier, to pay the taxes including the VAT / excise duty was upon the supplier. It is submitted that in one case VAT applicable at the relevant time was 5 + 1% i.e. 6% and now as per the GST the rate would be 12%. However in absence of any specific clause for variation of the rate and/or price revision under any pretext or reason including the revision of duty / excise / cost the State Government is right in not providing the price revision of rate contract. Making above submissions and relying upon the decisions of the Hon ble Supreme Court in the case of Rashtriya Ispat Nigam Limited vs. Dewan Chand Ram Saran reported in (2012) 5 SCC 306 (Paras 39 and 42) and in the case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and Another
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on behalf of the respondent GMSCL. [7.1] It is vehemently submitted by Shri Shelat, learned Advocate appearing on behalf of the respondent No.2 that the dispute raised in the present petitions is arising out of the contract between the parties which are in the realm of private law and therefore, any dispute relating to the interpretations of the terms of such a contract cannot be permitted to be agitated in a writ petition under Article 226 of the Constitution of India. [7.2] It is further submitted by Shri Shelat, learned Advocate appearing on behalf of the respondent No.2 that even the prayer sought in the writ petition is contrary to the express terms and conditions of the contract executed between the parties. It is submitted that the writ petitions are seeking alteration in the terms and conditions of a contract which is not maintainable in law. It is further submitted that under the terms of the contract, any question, dispute or difference arising under the conditions of the con
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as there was no provision for variation of price on account of increase or additional levy of any tax, the Board of GMSCL after due consideration of representations has thought it fit to seek the opinion of the Finance Department, Government of Gujarat. It is submitted that the Finance Department of the Government of Gujarat after due considerations of the terms of the contract opined that as there was no provision which entitled the variation of price as sought for, the GMSCL to take steps in accordance with the terms of the contract. It is submitted that thereafter opinion of the Finance Department came to be considered by the Board of Directors of the Corporation in its 22nd Meeting held on 23.08.2017. It is submitted that the Board of Directors consisting of Additional Chief Secretary (Medical Services and Medical Education Health and Family Welfare Department) as Chairman and other members after due consideration of the file resolved that the representation made is contrary to the
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d communication dated 31.08.2017 has been withdrawn and stands deleted and now the petitioners – suppliers are required to supply the goods at the contracted rate. [7.5] It is further submitted by Shri Shelat, learned Advocate appearing on behalf of respondent No.2 that as such the decision of the Board of Directors in its meeting held on 23.08.2017 is as such the decision of the Board of Directors after considering the opinion of the Finance Department which was sought. It is submitted that all the members of the Board of Directors have taken a conscious decision as recorded in the Minutes of Meeting of the Board of Directors dated 23.08.2017. [7.6] It is further submitted by Shri Shelat, learned Advocate appearing on behalf of the respondent No.2 that even earlier also the liability to pay the VAT and the excise duty and other levies was upon the supplier. It is submitted that now VAT and excise duties have been abolished and the same have been substituted by introduction of GST / CG
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itions. [8.0] Now, so far as the Special Civil Application No.17991/2017 is concerned, Ms. Minu Shah, learned Advocate appearing on behalf of the petitioners has adopted the submissions made by Shri Nanavati, learned Counsel appearing on behalf of the petitioners of Special Civil Application Nos.16765/2017 and 16773/2017. It is submitted that the additional facts in Special Civil Application No.17991/2017 is that earlier the liability to pay the VAT as well as excise duty was upon the supplier and in the case of Special Civil Application Nos.16765/2017 and 16773/2017 the liability was only to pay VAT upon the suppliers. [9.0] Heard learned Counsel appearing for respective parties at length. At the outset it is required to be noted that sum and substance of the prayer of the petitioners is that they may be permitted to revise the price in view of the change in the tax structure by introducing the GST. [9.1] It is the case on behalf of the petitioners that at the relevant time when they
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nclusive of all duties and sundries. No payment against any duties / delivery charges etc. will be considered under any separate heading under any circumstances. Octroi exemption certificate / Commercial Tax D form for, as applicable will be provided by the purchaser, on such request from the tenderer, after order has been placed by the concerned authorities. Tenderer will also have to guarantee for regular and timely supply of all the items. Clause 49 The claim of price revision of finished goods under any pretext or reason, including the revision of duty / excise / cost will not be allowed at any stage after the last date of submission of the tenders. RELEVANT CLAUSES OF RATE CONTRACT Clause 26 The claim of price revision of finished goods under any pretext or reason, including the revision of duty / excise / raw material price or any other cost will not be allowed at any stage after the last date of submission of the tenders. Clause 43 The above prices are inclusive of excise duty a
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of the rate contracts. Under the circumstances when the rate contract was inclusive of the duties / taxes / levies and there is no clause for variation / price revision in case of revision of any tax, the petitioner shall not be entitled to change the rate contract / revision of price on any ground which otherwise is not permissible as per the terms and conditions of the tender document / rate contracts. At the cost of repetition it is observed that as such the price quoted as per the rate contract and accepted by the petitioner – suppliers was inclusive of all duty, levies such as VAT, excise duty etc. and there shall not be any deviation permissible on any ground. Therefore, merely because the VAT / excise duty has been abolished, which was there at the relevant time when the prices were quoted and the rate contracts were executed and thereafter has been substituted by the GST, the petitioners cannot be permitted to change the rate contract / rates and cannot be permitted to have th
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s increased to 12%, in that case, as per the original terms and conditions of the tender document / rate contracts the liability to pay the revised / enhanced rate of tax was always upon the supplier and as per Clause 49 of the tender document the claim of price revision of any finished goods under any pretext or reason including the revision of duty / excise / cost will not be allowed at any stage after the last date of submission of the tenders. Therefore, merely because now the VAT and excise duty have been deleted and instead the same is substituted by GST which may be at 12%, the petitioners cannot claim the price revision on the aforesaid ground. As observed hereinabove, otherwise also the liability to pay VAT / excise duty etc. was upon the suppliers. Therefore, the grant of any relief as prayed in the present petitions would tantamount to varying terms and conditions of the tender document / rate contracts which in exercise of powers under Article 226 of the Constitution of Ind
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ecision making process or the decision should be perverse and not merely faulty or incorrect or erroneous. No such extreme case was made out by GYTTPL JV in the High Court or before us. 12. In Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay6 it was held that the constitutional Courts are concerned with the decision making process. Tata Cellular v. Union of India7 went a step further and held that a decision if challenged (the decision having been arrived at through a valid process), the constitutional Courts can interfere if the decision is perverse. However, the constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. This was confirmed in Jagdish Mandal v. State of Orissa8 as mentioned in Central Coalfields5. 13. In other words, a mere disagreement with the decision making process or the decision of the administrative authority is no re
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must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given. 16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court. [10.2] At this sta
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ty to pay the service tax would be upon the contractor and the employer rightly deducted the same from the bills of the claimant / contractor. On an appeal the High Court set aside the award passed by the learned Arbitrator by observing that the purpose of Clause 9.3 is not to shift the burden of taxes from the assessee who is liable under the law to pay the taxes to a person who is not liable to pay taxes under the law. The Division Bench confirmed the judgment of the learned Single Judge. On an appeal the Hon ble Supreme Court quashed and set aside the judgment and order passed by the learned Single Judge confirmed by the Division Bench by observing in paras 39, 40 and 42 as under: 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 t
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uty on the imports though this duty came into force subsequent to the relevant contract. The relevant clause 2(b) read as follows: (SCC p. 479, para 16) 16. … 2. (b). All taxes and duties in respect of job mentioned in the aforesaid contracts shall be the entire responsibility of the contractor… Reading this clause and the connected documents, this Court held that they leave no manner of doubt that all the taxes and levies shall be borne by the contractor including this countervailing duty. [10.3] In the present case as observed hereinabove as such the liability to pay GST under the GST / CGST Act is upon the supplier. As observed hereinabove the price quoted and the rate contract was inclusive of all the levies and taxes. Therefore, the petitioners shall not be entitled to the revision of price as sought. [11.0] Now, so far as the submission on behalf of the petitioners that so far as other Corporations in Rajasthan, Tamilnadu, Kerala etc. have permitted the suppliers to chan
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s. Therefore also, the impugned decision not suffering from any malafides and/or arbitrariness, the same is not required to be quashed and set aside in exercise of powers under Article 226 of the Constitution of India. [11.1] Now, so far as the submission on behalf of the petitioners that the impugned decision contained in the meeting held on 31.08.2017 not permitting the price revision is not a decision of the Committee and according to the petitioners the same is the decision of Finance Department is concerned, the same has no substance. It is required to be noted that the Board of Directors thought it fit to consult the Finance Department having financial implications and thereafter the Finance Department opined that considering the terms and conditions of the tender documents / rate contracts price revision is not permissible, thereafter a conscious decision has been taken by the Board of Directors in its meeting dated 23.08.2017. Therefore, the aforesaid submission on behalf of th
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