2021 (12) TMI 1532 - HC - Indian Laws

Disqualification for failing to submit GSTR-3B/ARN upheld; GSTR-1 alone insufficient, multiple bidders rejected, no arbitrariness

The HC dismissed the writ petition, holding the disqualification from the tender process for failure to submit the required GSTR-3B/ARN was valid. The ... Power of judicial review - Illegal disqualification from the tender process purportedly for non-fulfillment of one of the tender conditions - whether the submission of GSTR-1 and GSTR-3B was an essential term of the tender? - HELD THAT:- It appears that neither the said GSTR-3B nor the ARN number was submitted by the petitioner, till the filing of the aforesaid petition. It also appears that what is filed is GSTR-3B for the month of October 2020 and not the latest return i.e. of November 2020 which was the requirement. It is a matter of record, that as GSTR-1 or GSTR-3B was not submitted, not only the petitioner, but three other bidders’ application also came to be rejected. The petitioner had sent two legal notices dated 24/12/2020 and 6/1/2021 to the respondent Nos. 2 and 3. Pursuant thereto, the respondent No. 2 took legal opinion from the Government Advocate. The legal opinion given by the Government Advocate was that as per the tender schedule, it was mandatory to comply with all requirements of submission of documents i.e. submission of GSTR-1, GSTR-3B and other returns and that filing of the said documents was mandatory. Admittedly, the petitioner was disqualified for non-submission of GSTR-3B. Although, according to the learned Senior Counsel, nothing turns on non-submission of GSTR-3B, inasmuch as, the petitioner had produced GSTR-1 cannot be accepted. The submission of the learned Senior Counsel for the petitioner, that the petitioner could have always submitted the said document i.e. GSTR-3B return, if so called upon also cannot be accepted. As far as non-submission of ARN of GSTR-3B is concerned, it appears that filing of GSTR-3B returns was a mandatory requirement, in terms of the GST Act 2017. GSTR-3B is a consolidation of summary returns of inward and outward supplies i.e. purchases and expenses, required to be furnished by the registered person on monthly basis. It appears that GSTR-3B filing acknowledgment which the petitioner has annexed to the petition pertains to the return for September 2020, purportedly filed on 7th December 2020 - As per the Notification No. 29/2020 dated 23rd March 2020, it appears that GSTR-1 is a return which only gives details of all outward supplies, whilst GSTR-3B is filed only after paying the tax liability (CGST, SGST and IGST). There are no perversity or illegality or malafides or arbitrariness in the said interpretation. As authors of the tender documents, their interpretation will have to be accepted. Merely because another interpretation is plausible that, by itself, is not a reason warranting interference in the interpretation, in the facts. There are no substantial public interest involved warranting interference in writ jurisdiction, in exercise of our powers of judicial review - there are no malafides or arbitrariness in rejection of the petitioner’s bid on the premise of non-submission of GSTR-3B documents, which according to the respondents was an essential document of the tender. There is no overwhelming public interest involved in the present case, warranting our interference and for exercising our power of judicial review. Infact, any further delay would cause loss to the public exchequer and delay in commencement of the work. It is not a fit case, warranting the interference of this Court in writ jurisdiction. Accordingly, the petition stands dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether submission of ARN evidencing filing of both GSTR-1 and GSTR-3B (or any other returns) as specified in clause (d) of the NIT was an essential/mandatory condition for participation in the tender. 2. Whether disqualification of a bidder for non-submission of GSTR-3B ARN amounted to arbitrariness, mala fides or favouritism warranting judicial interference under Articles 226/227 and Articles 14, 19, 21 of the Constitution. 3. Whether alleged false declarations by successful bidders regarding 'works in hand' required interference with the award on grounds of material irregularity or public interest. 4. Whether delay and laches in seeking judicial relief after disqualification and after sending legal notices/RTI responses disentitled the petitioner to relief in writ jurisdiction. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Mandatory character of GSTR-1 and GSTR-3B ARN under the NIT Legal framework: Contract/tender interpretation principles; express terms of the Notice Inviting Tender (NIT) including clauses requiring scanned upload of specified documents and clause rendering tender invalid if requisite documents not uploaded. Precedent treatment: Reliance upon established principles that the author/owner of tender documents is the best judge to interpret its requirements (Air India; Tata Cellular; Afcons; Montecarlo; Jagdish Mandal and others) and that courts should show restraint unless arbitrariness/mala fides/public interest is established. Interpretation and reasoning: Clause (d) of the NIT expressly required system generated mail/SMS showing latest ARN generated after filing the latest return 'which was due as per GST Law (GSTR-1, GSTR-3B and any other returns)'. Combined reading of clause-1.1, clause-7(iii) and clause-8 shows the NIT made upload of such documents a mandatory precondition; non-upload attracts invalidity. The authority who authored the NIT is best placed to interpret this requirement; their legal opinion confirming mandatory nature is not perverse on the record. Ratio vs. Obiter: Ratio - Where tender documents expressly require specific returns/ARNs as mandatory, non-submission of those mandatory documents justifies rejection of the bid absent proof of arbitrary application. Obiter - Technical distinctions between GSTR-1 and GSTR-3B (nature/content) are noted but do not supplant the express tender requirement. Conclusion: Submission of ARN for both GSTR-1 and GSTR-3B as stipulated in clause (d) was an essential/mandatory term of the NIT; non-submission of GSTR-3B ARN justified disqualification under the tender terms. Issue 2 - Mala fides/arbitrariness and scope for judicial review in tender matters Legal framework: Principles limiting judicial review of commercial/tender awards - courts review decision-making process for mala fides, arbitrariness or where public interest demands intervention (Wednesbury unreasonableness principle as applied to tenders); jurisprudence emphasises restraint, leaving commercial evaluation to the employer unless threshold of bad faith/irrationality is crossed (Jagdish Mandal; Air India; Tata Cellular; Afcons; Montecarlo; Bharat Coking Coal; Silppi Constructions and others). Precedent treatment: Court followed the line that judicial interference in tenders is justified only if process is mala fide, arbitrary, irrational or public interest is substantially affected; mere procedural lapse or plausible alternative interpretation is insufficient. Interpretation and reasoning: On facts, multiple bidders (including three others) were rejected for identical non-submission, and successful bidders produced the requisite ARNs. The authority sought and followed legal advice that the requirement was mandatory. No contemporaneous record indicates intentional favour or selective relaxation disadvantaging the petitioner; alleged malafides were not substantiated by the record. There was no overwhelming public interest necessitating vacation of the award, and interference would delay work and cause loss to public exchequer. Ratio vs. Obiter: Ratio - Absent demonstrable mala fides, arbitrariness or public interest considerations, courts will not set aside tender decisions where the authority's reasonable interpretation of its own express tender conditions leads to disqualification. Obiter - Courts may examine whether the authority's decision-making process complied with its own tender procedures, but must exercise discretion cautiously. Conclusion: Rejection for non-submission of mandatory GSTR-3B ARN did not exhibit mala fides or arbitrariness; judicial interference was not warranted. Issue 3 - Allegation of false declarations by successful bidders about 'works in hand' Legal framework: Tenders commonly require declarations regarding ongoing works; false material declarations can vitiate qualification and award if proved and shown to be relied upon by the authority. Precedent treatment: Principle that material misrepresentation by a bidder can justify disqualification or rescission, but the petitioner bears burden to establish falsity and that the authority acted on or ignored clear material contrary to its own records. Interpretation and reasoning: The Court found it unnecessary to decide this issue on merits because the primary ground for challenge (non-submission of GSTR-3B ARN) sufficed to support disqualification. The authority explained reasons for waivers/relaxations qua participants, and contemporaneous records indicated that the authority had information about works in hand and consciously proceeded; the petitioner's allegations of suppression were not demonstrated to the threshold required to overturn the award. Ratio vs. Obiter: Obiter - If proved, false declarations regarding works in hand could invalidate qualification; however, on the present record such proof was absent and the Court did not base its decision on this issue. Conclusion: No interference was rendered on this ground; the Court did not rely on alleged false undertakings to decide the matter. Issue 4 - Delay and latches Legal framework: In tender jurisprudence petitioners must act promptly; delay and laches can be fatal to claim for writ relief where public interest and potential loss to exchequer exist. Precedent treatment: Consistent with authorities emphasizing prompt approach to constitutional courts in tender disputes; delay may disentitle relief absent satisfactory explanation and where public interest disfavors disruption. Interpretation and reasoning: The petitioner's application was rejected December 2020; legal notices were sent December/January and RTI followed months later; writ filed in June 2021. Though RTI was invoked, the Court found the delay and lack of promptitude significant in a tender context and a factor against intervention given absence of overwhelming public interest. Ratio vs. Obiter: Ratio - Delay/laches in challenging tender outcomes weighs strongly against granting relief in writ jurisdiction, particularly where award has been made and public interest may be affected by reopening the process. Conclusion: Delay and laches reinforced the conclusion against judicial interference. Overall Conclusion The authority's interpretation that ARN evidence of latest returns including GSTR-1 and GSTR-3B was mandatory was reasonable and not perverse; non-submission of GSTR-3B ARN justified the petitioner's disqualification. There was no demonstrable mala fides, arbitrariness or overriding public interest to warrant interference. Delay and laches further militated against relief. The writ petition seeking to set aside the disqualification/award was therefore dismissed.