2021 (10) TMI 37 - HC - GST

Court Upholds Bid Rejection Due to Missing GST Certificate

M/s. ASR Hospitals (India) Pvt. Ltd. Versus The State of Andhra Pradesh, Andhra Pradesh Medical Services Infrastructure Development Corporation, M/s. Shruthikesh Industries, M/s. Integrated Health Group Pvt. Ltd.

The court dismissed the writ petition, upholding the rejection of the petitioner's bid for not submitting a GST registration certificate and accepting the ... Scope of the tender / Financial Bid - Non-submission of GST registration certificate - entity involved in the business of Healthcare Services - exemption under N/N. 9/2017-Integrated Tax (Rate), dated 28.06.2017 - Rejection of technical bid - HELD THAT:- It is true that the writ petitions filed against the State or its instrumentalities in relation to contractual matters are maintainable. However, that general proposition has certain limitations. The Court exercising jurisdiction under Article 226 would have to consider the factors, enumerated above, among others, on a case to case basis, before exercising its discretion to hear a writ Petition, relating to contractual disputes, under Article 226 of the Constitution of India - Applying the above principles to the present case, the Petitioner has not been able to make out any case of discrimination or bias against the Respondents. The only ground that could be raised by the petitioner is that of an arbitrary action of the 2nd Respondent, in rejecting the bid of the Petitioner and allowing the Respondents to participate in the financial bids. It would now be necessary to see whether the said allegations hold. Disqualification of the Petitioner - HELD THAT:- A person is exempted from the requirement of registration if he is engaged in supplying only those goods and services which are exempt from registration and does not supply any other goods or services. If such a person deals in any other goods or services, he will not be eligible for such exemption - Sri Chittem Venkata Reddy, the learned counsel appearing for the 2nd respondent submits that the successful tenderer would be required, as per Section IV of the Tender Documents, to supply medicines and other goods, which are not exempted under the GST Act, in the process of maintaining SNCUs, and for that reason the 2nd Respondent had required all bidders to submit GST registration certificates. It is clear that in such a situation, the Petitioner would have to supply drugs and goods which are not exempt from levy of GST and the petitioner would require to be registered, under the GST Act. In the absence of such a registration certificate, the action of the 2nd Respondent in rejecting the technical bid of the Petitioner cannot be termed to be arbitrary. Refusal to reject the technical bid of the 3rd Respondent - HELD THAT:- The petitioner would seek to point out certain provisions where details of the lead member are required and where the lead member has to give certain assurances etc. However, this requirement cannot be taken to mean that the bid document has to be filed only by the lead member. All such information and assurances can always be obtained by any other member and file before the tender authority. As such it cannot be said that the 3rd respondent is disqualified on that count and the action of the 2nd Respondent in allowing the 3rd respondent in participating in the financial bid cannot be termed arbitrary. Permission to participate in the financial bid even though the 4tgh Respondent did not have the necessary experience to qualify in the technical bid - HELD THAT:- The 4th respondent had submitted a certificate from the NRI Academy of Sciences stating that NRI Academy of Sciences through the 4th respondent had provided such services to CHC Seethampeta in ITDA area of Seethampeta, A.P, from March, 2018 to 13.08.2020 and the certificate from the medical officer of the area hospital Seethampeta that such services were being given at CHC Seethampeta in ITDA area of Seethampeta from 14.08.2020 till 29.07.2021. This would show that the 4th respondent has been giving services for more than three years required under the said eligibility criteria. The contention of the petitioner that such services were not in accordance with the contract between M/s. NRI Academy of Sciences and the State of A.P., has not been demonstrated by the petitioner. Except a statement that it is not in accordance with the contract between the parties, the petitioner has not placed any material before this Court to take such a view - The certificates produced by the 4th Respondent do attest to the experience claimed by the 4th respondent. In the circumstances, the contention of the petitioner that the action of the 2nd respondent in this regard is arbitrary must fail. The Writ is dismissed. Issues involved:1. Rejection of the petitioner's bid due to non-submission of GST registration certificate.2. Acceptance of the 3rd respondent's bid despite alleged non-compliance with consortium requirements.3. Acceptance of the 4th respondent's bid despite alleged lack of required experience.Detailed Analysis:1. Rejection of the petitioner's bid due to non-submission of GST registration certificate:The petitioner contended that their bid should not have been rejected for not furnishing a GST registration certificate since they were exempt from registering under the GST Act due to their involvement in healthcare services, as per notification No.9/2017-Integrated Tax (Rate), dated 28.06.2017. The 2nd respondent argued that the GST registration certificate was a mandatory requirement for the technical bid. The court noted that the petitioner’s primary activity might be exempt from GST, but the tender required the provision of drugs and other goods not exempt from GST. Consequently, the petitioner needed to be registered under the GST Act. The court upheld the 2nd respondent's decision, stating that the rejection of the petitioner's technical bid was not arbitrary.2. Acceptance of the 3rd respondent's bid despite alleged non-compliance with consortium requirements:The petitioner argued that the 3rd respondent, part of a consortium, submitted the bid instead of the lead partner, Sri Ramachandra Children and Dental Hospital, which was against the tender requirements. The 2nd respondent and the 3rd respondent countered that the tender documents did not stipulate that only the lead member must submit the bid. The court agreed with the respondents, stating that while the lead member had to provide certain details and assurances, it did not mean that only the lead member could submit the bid. Therefore, the acceptance of the 3rd respondent's bid was not deemed arbitrary.3. Acceptance of the 4th respondent's bid despite alleged lack of required experience:The petitioner claimed that the 4th respondent did not meet the minimum three years of experience required for the technical bid. The 4th respondent provided certificates from the NRI Academy of Sciences and the medical officer of the area hospital Seethampeta, demonstrating over three years of experience in maintaining SNCUs. The petitioner argued that this experience was not in accordance with the contract between NRI Academy of Sciences and the State of A.P., but failed to provide evidence. The court found that the certificates attested to the 4th respondent’s experience and capacity to execute the contract, thus rejecting the petitioner's claim of arbitrariness.Conclusion:The court dismissed the writ petition, finding no arbitrariness in the 2nd respondent’s actions regarding the rejection of the petitioner's bid and the acceptance of the 3rd and 4th respondents' bids. The court emphasized the principles of judicial restraint in contractual matters and the necessity for administrative bodies to have freedom in contract decisions, provided they act reasonably and without bias.