2017 (12) TMI 514 - HC - GST

Petition challenging tender cancellation post-GST dismissed. Decision lawful due to tax law change.

The HC of Madhya Pradesh dismissed a petition challenging the cancellation of a tender post-GST implementation. The court held the decision was lawful due ... Cancellation of tender - change in tax regime - application of Goods and Services Tax - effect of tax change on procurement contracts - absence of concluded contract/letter of acceptance - judicial interference in administrative decisionChange in tax regime - application of Goods and Services Tax - effect of tax change on procurement contracts - judicial interference in administrative decision - Validity of the State Government's decision to not proceed with tenders invited after GST became applicable and to exclude GST from future tenders. - HELD THAT: - The court accepted the administrative rationale that the introduction of Goods and Services Tax from 1.7.2017 altered the tax environment materially, including the entitlement of contractors to input tax credits on purchases. In view of that change, the State Government's decision on 5.8.2017 to exclude GST from future offers and not to act upon tenders invited in the interim period was a policy response to a changed tax regime. The court found that this decision cannot be characterised as illegal or arbitrary so as to warrant judicial interference.The State Government's decision to cancel or not act upon the tenders in the period 1.7.2017 to 5.8.2017 and to amend future tendering practice was held to be lawful and not interfered with.Absence of concluded contract/letter of acceptance - cancellation of tender - Whether the petitioner had a vested right to the contract on the basis of its offer despite cancellation of the tender. - HELD THAT: - The court noted that no letter of acceptance had been communicated to the petitioner and therefore no contract was concluded. In the absence of a concluded contract, the petitioner could not claim an entitlement to the grant of the contract merely on the basis of its submitted offer. Consequently, there was no existing contractual right that required protection by the court against the administrative decision.The petitioner's claim was rejected on the ground that no concluded contract existed and no right to the contract arose from the mere submission of an offer.Final Conclusion: Writ petition dismissed; the State's decision to revise tendering practice in light of GST applicability was upheld as not arbitrary, and the petitioner had no enforceable contractual right in the absence of a communicated letter of acceptance. The High Court of Madhya Pradesh dismissed a petition challenging the cancellation of a tender due to the implementation of Goods and Service Tax from 1.7.2017. The court ruled that the decision was not illegal or arbitrary as the tax regime had changed, and there was no concluded contract with the petitioner. The writ petition was dismissed.