2024 (9) TMI 1009 - HC - GST

Battery Energy Storage Systems Bid Challenge Rejected: Bidders Must Independently Assess GST Liability Before Tender Submission

HC dismissed petitioner's plea seeking GST clarifications for Battery Energy Storage Systems (BESS). Court found no merit in the request, noting RfS ... Applicability of Goods and Services Tax to Battery Energy Storage Systems - Interpretation of tender terms regarding tax pass-through - Liability of administrative authority to issue tax clarifications - Maintainability of challenges to tender conditions raised after pre bid periodLiability of administrative authority to issue tax clarifications - Applicability of Goods and Services Tax to Battery Energy Storage Systems - Whether the Court can direct the Central Board of Indirect Taxes and Customs (CBIC) to pronounce a clarification on the applicability of GST to BESS services. - HELD THAT: - The Court held that chargeability of GST is governed by the Central, State and Integrated GST statutes and the rules thereunder, and that there is no statutory obligation requiring CBIC to entertain taxpayer queries or to issue clarifications on individual queries. Section 168 permits CBIC to issue orders, instructions or directions for uniformity to Central Officers, but does not create a right in taxpayers to obtain binding clarifications from CBIC on specific taxability questions. Accordingly, the prayer seeking a direction to CBIC to clarify GST applicability to BESS cannot be acceded to. [Paras 11, 12, 13]Prayer for a direction to CBIC to clarify GST applicability to BESS is declined.Interpretation of tender terms regarding tax pass-through - Applicability of Goods and Services Tax to Battery Energy Storage Systems - Whether the RfS clause stating that tariff quoted shall be exclusive of GST and that GST, if any, shall be passed through to the Buying Entity, is ambiguous and whether respondent no.1 (SECI) can be directed to issue a binding clarification on GST chargeability. - HELD THAT: - The Court found no ambiguity in the RfS provision; clause 30.2(III)(e) expressly required tariffs in the Financial Bid to be quoted exclusive of GST and provided for pass-through of GST to the Buying Entity. Determination of whether GST is payable on the BESS service is a question to be ascertained by the bidders with reference to the GST statutes. Respondent no.1 cannot issue a binding legal determination on the chargeability of tax under the GST statutes; any taxability question must be resolved by reference to the enacted GST law and relevant authorities, not by a tendering authority's clarification. [Paras 4, 14, 15]RfS clause is not ambiguous; SECI cannot be directed to give a binding determination on whether BESS services are taxable under the GST statutes.Maintainability of challenges to tender conditions raised after pre bid period - Whether the petition challenging the RfS terms was maintainable given the delay and failure to raise the issue at the pre bid meeting. - HELD THAT: - The Court accepted the respondents' contention that the petition was belated. The RfS was issued on 26.06.2024, the pre bid meeting was held on 12.07.2024, and last date for bid submission was 12.08.2024; the petition was filed on the eve of bid opening (11.09.2024). Any apprehensions regarding RfS terms ought to have been raised in the pre bid meeting. The delay and failure to seek clarification during the prescribed pre bid process rendered the present challenge unsustainable. [Paras 8, 16]Petition held to be delayed and therefore not maintainable; reliefs denied on that ground.Final Conclusion: The petition seeking directions to CBIC and SECI regarding GST on BESS is dismissed: CBIC cannot be compelled to issue taxpayer specific clarifications; the RfS provision requiring tariffs to be quoted exclusive of GST is not ambiguous and SECI cannot give a binding taxability ruling; additionally the petition was held to be belated for failing to raise the issue at the pre bid stage. Issues:1. Clarifications sought by the petitioner regarding GST applicability on Battery Energy Storage Systems (BESS).2. Delay in seeking clarifications and approaching the court on the eve of bid opening.Analysis:The petitioner, an Association of Power Producers, filed a petition seeking directions for respondent no. 1 and respondent no. 2 to decide on clarifications regarding BESS and GST applicability. The petitioner raised concerns about the ambiguity created by clause 30.2 (III) (e) in the Request for Selection (RfS) issued by respondent no. 1, impacting bidders' input tax credit entitlement and bid values. The petitioner argued that the confusion arose due to the Draft 'Tariff based competitive bidding guidelines for procurement of storage capacity/stored energy from Pumped Storage Plants' issued by the Ministry of Power, making GST applicable to energy storage services. However, the court noted that the RfS clearly stated that bids would be evaluated exclusive of GST.The court rejected the petitioner's plea for directions to the Central Board of Indirect Taxes (CBIC) to clarify GST applicability, citing that GST is governed by specific statutes and rules, and CBIC is not obligated to provide clarifications on individual queries from taxpayers. The judgment emphasized that bidders must determine GST liability based on relevant statutes. Additionally, the court highlighted that respondent no. 1 cannot issue binding clarifications on tax chargeability for BESS services. The court also noted the delay in seeking clarifications, stating that any concerns should have been addressed during the pre-bid meeting.Ultimately, the court dismissed the petition, finding it untimely and lacking merit. The judgment underscored that the bid evaluation would proceed without GST consideration, as specified in the RfS. The court's decision was based on the petitioner's delayed approach and the absence of ambiguity in the RfS provisions. The application was disposed of, and the petition was dismissed, denying the petitioner's requested relief.