Tender bid rejected for submitting two years' income tax returns instead of mandatory three years under Clause 13(h)

Gauhati HC dismissed petitioner's challenge to tender disqualification. Technical Evaluation Committee rejected bid for non-compliance with Clause 13(h) requiring income tax returns for three years; petitioner submitted only two years' returns. Court held that Average Annual Financial Turnover differs from Income Tax Returns, and MSE exemption under Clause 3(e) for financial turnover submission does not extend to income tax return requirements under Clause 13(h). Disqualification upheld as petitioner failed to meet mandatory three-year documentation requirement.

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Issues Involved:

1. Whether the documents required under Clause 13(h) of the NIT fall within the ambit of "Average Annual Financial Turnover" as per Clause 3(b) and whether Clause 3(e) exempts the petitioners from submitting Income Tax Returns for three years.
2. Distinction between "Turnover" and "Income Tax Return."
3. Judicial restraint in the interpretation of tender documents by courts.

Detailed Analysis:

1. Applicability of Exemption under Clause 3(e) to Clause 13(h):

The core issue was whether the exemption provided to Micro and Small Enterprises (MSEs) under Clause 3(e) of the Notice Inviting Tender (NIT) also applied to the requirement of submitting Income Tax Returns as per Clause 13(h). The petitioners argued that as MSEs, they were exempt from submitting documents related to average annual financial turnover and experience under Clause 3(b) and 3(c), and hence, should not be required to submit Income Tax Returns for the year 2022-23. However, the court found that Clause 13(h), which mandates the submission of Income Tax Returns and annual audited reports for the last three financial years, is distinct from the requirements under Clause 3(b). The exemption under Clause 3(e) does not extend to Clause 13(h), as the latter pertains to the "Schedule of Requirement" for the technical bid, which is crucial for bid evaluation. Therefore, the court concluded that the petitioners' failure to submit the Income Tax Return for 2022-23 justified the rejection of their technical bid.

2. Distinction between "Turnover" and "Income Tax Return":

The court elaborated on the difference between "Turnover" and "Income Tax Return." Turnover is defined as the total revenue generated from sales before deducting expenses, serving as a measure of business activity. In contrast, an Income Tax Return is a comprehensive report filed with tax authorities, detailing income, deductions, and tax liabilities, which may include income from various sources beyond sales. The court emphasized that while turnover is a criterion for assessing financial strength, Income Tax Returns are necessary for tax compliance. The court cited the Supreme Court's interpretation in the case of Commissioner of Income Tax-VII, New Delhi vs. Punjab Stainless Steel Industries, which clarified that "turnover" refers to "total sales" and does not include non-operational income. Consequently, the court determined that the two terms are not interchangeable, and the exemption for turnover under Clause 3(e) does not apply to the requirement of submitting Income Tax Returns under Clause 13(h).

3. Judicial Restraint in Tender Document Interpretation:

The court underscored the principle of judicial restraint in the interpretation of tender documents, citing precedents from the Supreme Court. It reiterated that the author of the tender document is best positioned to interpret its requirements, and courts should exercise minimal interference unless the decision is arbitrary or unreasonable. The court referred to the cases of Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. and Silppi Constructions Contractors vs. Union of India, which emphasize that courts should defer to the expertise of the tendering authority and avoid substituting their judgment for that of the authority. The court concluded that the interpretation of the tender requirements by the respondent authorities was not arbitrary or unreasonable, and thus, judicial intervention was unwarranted.

Conclusion:

The court dismissed the writ petition, holding that the petitioners' failure to submit the required Income Tax Returns for three years, as mandated by Clause 13(h), was a valid ground for disqualification. The exemption under Clause 3(e) did not extend to the requirements of Clause 13(h), and the distinction between turnover and Income Tax Returns was upheld. The court emphasized the importance of adhering to the specific requirements of tender documents and the limited scope of judicial review in such matters.

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