TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 69
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....e Constitution of India, the respective petitioners have prayed for an appropriate writ, direction and order quashing and setting aside the impugned decisions / order of the respondent No.2 - Gujarat Medical Services Corporation Ltd. (hereinafter referred to as "GMSCL") being Email Ref.No.GMSCL/DRUG/201718/ as well as give effect to the change in Tax Structure whereby 12% GST has been introduced on goods that are supplied by the petitioners to respondent No.2 - GMSCL. [2.1] By way of amendment the petitioners have also prayed to quash and set aside the impugned decision of the respondent No.2 - GMSCL being Agenda Item No.22/15 and Agenda Item No.22/25 of the Minutes of 22nd Meeting of the Board of Directors of GMSCL dates 23.08.2017. [3.0] For the sake of convenience, Special Civil Application No.18765/2017 is treated as a lead matter and the facts in the said Special Civil Application are narrated which are as under: [3.1] That the petitioners are engaged in the business of manufacture and distribution of Surgical Dressing items such as Bandages, Gauze etc. That the respondent No.2 GMSCL is a procuring agency of Government of Gujarat which procures the drugs, surgical items etc....
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....ender Form for Item Code No.4006 i.e. Bandage Cloth with ISI Mark & Item Code No.4024 i.e. Rolled Bandage (5 mtr * 5 cm) with ISI Mark and had submitted Technical and Commercial Bid for which petitioners were awarded the tender through Acceptance Letter dated 23.08.2016 for Item Code 4024 and Acceptance Letter dated 09.09.2016 for Item Code 4006. Rate Contract bearing No.GMSCL / Drugs / RC / 5884006 / D166 / 6853668547 /20162017 for Item Code No.4006 and Rate Contract bearing No.GMSCL / Drugs / RC / 5884024 / D93 /6481564826 / 20162017 for Item Code No.4024 were respectively entered on 28.09.2016 and 06.09.2016 which were valid up to 31.05.2018. [3.2] It is the case on behalf of the petitioners that as per the tender terms, the petitioners were asked to provide rates prepacking unit (without applicable VAT / CST) as well as provide percentage of VAT / CST, if applicable in different columns. According to the petitioners, as per Clause 13(b)9 of the respective tender documents dated 22.07.2015, 10.11.2015 and 17.02.2016 as well as Bidding Schedule attached to the tender documents, petitioners had to include Excise Duty, Packing, Forwarding, Insurance Charges etc. in prepacking unit....
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....te a letter to the GMSCL asking for the payment that was due where the petitioner had also agreed to accept the payment as per 5% tax subject that in future the petitioner gets payment for rest 7% tax. That thereafter vide impugned communication dated 31.08.2017, the GMSCL had asked the petitioners to make necessary arrangement / amendments in their price for those items which petitioners were supplying. That in the meantime the GMSCL in its meeting held on 23.08.2017 wherein two Agenda Items i.e. Agenda Item No.22/15 titled as Amendment in Rate Contract due to GST and Agenda Item No.22/25 titled as Amendment in Tax due to GST were passed and the GMSCL resolved that "since the Finance Department, Government of Gujarat did not agree to revise a rate due to GST effect, the Board decided to seek consent of firms for supply of the items as per rate contract". It was also resolved that "if the firms do not agree, the GMSCL will float fresh tender and as per the agreement terms and conditions for the existing rate contract for such items". [3.4] Feeling aggrieved and dissatisfied with the impugned decision in the communication dated 31.08.2017 (AnnexureA) by which the petitioners were r....
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....duction of CGST Act, 2017 and GST Act, 2017. It is submitted that such action is absolutely arbitrary, unfair and violative of Article 14 of the Constitution of India. Relying upon the aforesaid Clauses, it is submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that the rates prepacking unit which were offered by the petitioners and which came to be accepted by the GMSCL, thereafter cannot be revised under any pretext or reason, including in case of revision of duty / Excise / cost. It is submitted that by impugned communication dated 31.08.2017 as such the GMSCL has asked the petitioners to reduce the rates prepacking unit (without applicable VAT / CST) against those mentioned in the acceptance letter and rate contract to cover the change in tax structure which was to be borne by the GMSCL. It is submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that from the illustration provided in the impugned communication dated 31.08.2017, it is evident that the preGST rates have been shown in which basic rate i.e. prepacking unit (without applicable VAT / CST) has been taken as Rs. 100 on which 5% VAT or CST was applicable and t....
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....evising the rate contract, deserves to be quashed and set aside. [5.4] It is further submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that as such at the time when the rates were offered, which were accepted at the time of awarding the contract for supply of goods in question, no one had kept in mind the GST / rates of GST. It is submitted that the rates were offered considering the existing taxes. It is submitted that rate contract was over and above the tax liability whatever may be. It is submitted that in any case rate contract was not inclusive of tax and it was over and above and subject to revision of the tax liability. [5.5] It is further submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that as such the relevant clauses of the tender documents and the rate contracts more particularly Clause 49 shall bind both the parties. It is submitted that Clause 49 of the tender document specifically provide that claim of price revision of finished goods under any pretext or reason, including the revision of duty / excise / cost will not be allowed at any stage after the last date of submission of the tender. It is su....
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....plicable at the relevant time was 5 + 1% i.e. 6% and now as per the GST the rate would be 12%. However in absence of any specific clause for variation of the rate and/or price revision under any pretext or reason including the revision of duty / excise / cost the State Government is right in not providing the price revision of rate contract. Making above submissions and relying upon the decisions of the Hon'ble Supreme Court in the case of Rashtriya Ispat Nigam Limited vs. Dewan Chand Ram Saran reported in (2012) 5 SCC 306 (Paras 39 and 42) and in the case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and Another reported in (2016) 16 SCC 818, it is requested to dismiss the present petitions. [6.1] Shri Trivedi, learned Advocate General appearing on behalf of the State has also requested to dismiss the present petitions and not to exercise powers under Article 226 of the Constitution of India in view of the specific arbitration clause in the contract in case of any dispute between the parties by relying upon the decisions of the Hon'ble Supreme Court in the case of State of U.P. and Others vs. Bridge & Roof Company (India) Ltd. reported in (1996) 6 SC....
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....d that in accordance with the terms of the contract, as there was no provision for variation of price on account of increase or additional levy of any tax, the Board of GMSCL after due consideration of representations has thought it fit to seek the opinion of the Finance Department, Government of Gujarat. It is submitted that the Finance Department of the Government of Gujarat after due considerations of the terms of the contract opined that as there was no provision which entitled the variation of price as sought for, the GMSCL to take steps in accordance with the terms of the contract. It is submitted that thereafter opinion of the Finance Department came to be considered by the Board of Directors of the Corporation in its 22nd Meeting held on 23.08.2017. It is submitted that the Board of Directors consisting of Additional Chief Secretary (Medical Services and Medical Education Health and Family Welfare Department) as Chairman and other members after due consideration of the file resolved that the representation made is contrary to the terms of the contract and could not be acceded to and call upon the vendors to give confirmation regarding supply at the contracted price and in t....
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....e revision shall be permissible on any ground. It is submitted that therefore the petitioners cannot be permitted to revise the rates and if such prayer is granted it would tantamount to change in terms and conditions of the tender documents / rate contracts, which is not permissible in exercise of powers under Article 226 of the Constitution of India. Making above submissions and relying upon above decisions, it is requested to dismiss the present petitions. [8.0] Now, so far as the Special Civil Application No.17991/2017 is concerned, Ms. Minu Shah, learned Advocate appearing on behalf of the petitioners has adopted the submissions made by Shri Nanavati, learned Counsel appearing on behalf of the petitioners of Special Civil Application Nos.16765/2017 and 16773/2017. It is submitted that the additional facts in Special Civil Application No.17991/2017 is that earlier the liability to pay the VAT as well as excise duty was upon the supplier and in the case of Special Civil Application Nos.16765/2017 and 16773/2017 the liability was only to pay VAT upon the suppliers. [9.0] Heard learned Counsel appearing for respective parties at length. At the outset it is required to be noted....
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....ge Excise Duty at the rate prevailing at the time of supply and decrease the price proportionally and inform the office of such decrease if any with detail calculations." [9.3] Considering the aforesaid relevant clauses and even the clauses mentioned in the rate contract which were accepted by even the petitioner - suppliers, the prices offered / rates shown against the item in all cases, shall be under the net prices inclusive of all duties and sundries. As per Clause 13(b) even no payment against any duties / delivery charges etc. shall be considered in separate heading under any circumstances. As per Clause 49 of the tender document the claim of price revision of any finished goods under any pretext or reason, including the revision of duty / excise / cost shall not be allowed at any stage after the last date of submission of the tenders. Similar are the conditions of the rate contracts. Under the circumstances when the rate contract was inclusive of the duties / taxes / levies and there is no clause for variation / price revision in case of revision of any tax, the petitioner shall not be entitled to change the rate contract / revision of price on any ground which otherwise i....
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.... pay VAT / excise duty etc. was upon the suppliers. Therefore, the grant of any relief as prayed in the present petitions would tantamount to varying terms and conditions of the tender document / rate contracts which in exercise of powers under Article 226 of the Constitution of India shall not be permissible. [10.0] At this stage few decisions of the Hon'ble Supreme Court relied upon by the learned Counsel appearing on behalf of the State are required to be referred to. [10.1] In the case of Afcons Infrastructure Limited (Supra), the Hon'ble Supreme Court in paras 11 to 16 have observed and held as under: "11. Recently, in Central Coalfields Ltd. v. SLLSML (Joint Venture Consortium)5 it was held by this Court, relying on a host of decisions that the decisionmaking process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decisionmaking process is mala fide or is intended to favour someone. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which no responsible authorit....
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....the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given. 16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court." [10.2] At this stage the decision of the Hon'ble Supreme Court in the case of Rashtriya Ispat Nigam Ltd. (Supra) is also required to be referred to and considered. In the case before the Hon'ble Supreme Court the question was whether under the relevant clause 9.3 of the terms and conditions of the contract between the parties, an employer - Rashtriya Ispat Nigam Ltd. was right in deducting the service tax from the bills of the respondent - contractor ? The relevant clause 9.3 in the said case was as unde....
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....rial Co. Ltd.9 In that matter, the question was as to whether the contractor was liable to pay and bear the countervailing duty on the imports though this duty came into force subsequent to the relevant contract. The relevant clause 2(b) read as follows: (SCC p. 479, para 16) "16. ... '2. (b). All taxes and duties in respect of job mentioned in the aforesaid contracts shall be the entire responsibility of the contractor...' " Reading this clause and the connected documents, this Court held that they leave no manner of doubt that all the taxes and levies shall be borne by the contractor including this countervailing duty." [10.3] In the present case as observed hereinabove as such the liability to pay GST under the GST / CGST Act is upon the supplier. As observed hereinabove the price quoted and the rate contract was inclusive of all the levies and taxes. Therefore, the petitioners shall not be entitled to the revision of price as sought. [11.0] Now, so far as the submission on behalf of the petitioners that so far as other Corporations in Rajasthan, Tamilnadu, Kerala etc. have permitted the suppliers to change the rates quoted and have considered the change in tax structur....