Lump-sum contract finality prevents recovery of unaccounted pre-existing duty-exemption benefits and requires release of security deposits.

A public authority cannot revise a completed lump-sum contract to recover an alleged benefit from pre-existing excise-duty and customs-duty exemptions where the tender documents contained no tax-component break-up and the authority accepted the bid on that basis. The notes state that the State's own Essentiality Certificate, dropped audit objections, and belated revival of the claim undermined any basis for withholding the contractor's security deposit. They further state that the recovery notice, reply, and demand formed a single process; once the demand was rejected and refund directed, a further enquiry into the same alleged benefit could not continue. The security deposit was therefore refundable unconditionally.

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Issues: (i) Whether the State could withhold the contractor's security deposit on the allegation that it obtained an unintended benefit from excise-duty and customs-duty exemption; (ii) Whether the State could be permitted to continue an enquiry under the notice demanding recovery of the alleged unintended benefit.

Issue (i): Whether the State could withhold the contractor's security deposit on the allegation that it obtained an unintended benefit from excise-duty and customs-duty exemption.

Analysis: The duty-exemption notifications were operative before the tender was issued. The tender and tender-acceptance documents stipulated only a lump-sum contract value and contained no item-wise rate or tax-component break-up reflecting the exemption. The State accepted the bid on those terms and could not, after completion of the works, seek to alter the contractual value by transferring the consequence of its own estimate-making error to the contractor. The Essentiality Certificate obtained by the State also contradicted its claimed lack of awareness of the exemption. The audit objections had been dropped and no pending objection was recorded before the later demand; revival of the alleged benefit during the writ proceedings was belated, arbitrary and unsupported.

Conclusion: The State was not entitled to withhold the security deposit; its release to the contractor was warranted.

Issue (ii): Whether the State could be permitted to continue an enquiry under the notice demanding recovery of the alleged unintended benefit.

Analysis: The notice, the contractor's reply, and the subsequent demand formed one continuous process. The demand founded on that process had been rejected while directing full refund of the security deposit. Permitting a further enquiry into the same alleged benefit would therefore be inconsistent with the determination that the State had no sustainable basis to retain the deposit or pursue the demand.

Conclusion: The State could not proceed with the enquiry under the notice concerning the alleged unintended benefit.

Final Conclusion: The contractor's entitlement to an unconditional refund of the security deposit stands affirmed, and the State's proposed recovery enquiry based on the alleged duty-exemption benefit is excluded.

Ratio Decidendi: A public authority cannot reopen or revise a completed lump-sum contract to recover an alleged tax-exemption benefit arising from its own failure to account for a pre-existing exemption in the tender estimate, particularly through belated and unsupported audit objections.

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