TaxTMI 
TaxTMI 
2020 (12) TMI 746
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to D.L.W Part no.16080385. The Turbo Wheel Impeller Balance Assembly (in short referred to as the "procurement product") is an assembly critical to the 710G HHP locomotive run by the Railway. This product consists of a turbine and a compressor, coupled on a common shaft, and balanced to enable its rotation at speeds as high as 22,000 RPM(rounds per min). This assembly is an essential moving part of the 710-G turbocharger. With the drop in higher temperature exhaust gases, there is rotational energy delivered to the turbine which in turn delivers its input to the compressor, enabling pumping of high density air into engine cylinders, for combustion. A reading of the tender document shows that the validity period of offer was 120 days. The commercial compliance conditions of the tender, relevant for our purpose, are as under:- "1.In case the successful tenderer is not liable to be registered under CGST/IGST/UTGST/SGST Act. The Railway shall deduct the applicable GST from his/their bills under reverse charge mechanism [RCM] and deposit the same to the concerned tax authority." "9.Please enter the percentage of local content in the material being offered. Please enter 0 for fully....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt to which the price quoted by a local supplier may be above the L1 for the purpose of purchase preference. 3.Requirement of Purchase Preference:- Subject to the provisions of this Order and to any specific instructions issued by the Nodal Ministsry or in pursuance of this Order, purchase preference shall be given to local suppliers in all procurements undertaken by procuring entities in the manner specified hereunder:- b. In the procurements of goods which are not covered by paragraph 3a and which are divisible in nature, the following procedure shall be followed: i. Among all qualified bids, the lowest bid will be termed as L1. If L1 is from a local supplier, the contract for full quantity will be awarded to L1. ii. If L1 bid is not from a local supplier, 50% of the order quantity shall be awarded to L1. Thereafter, the lowest bidder among the local suppliers will be invited to match the L1 price for the remaining 50% quantity subject to the local supplier's quoted price falling within the margin of purchase preference, and contract for that quantity shall be awarded to such local supplier subject to matching the L1 price. In case such lowest eligible local supplier ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n to those products which have atleast 50% local content, ordinarily, with such purchase preference existing in the margin of 20%. Margin of purchase preference would refer to the extent to which the price of a local supplier/local product may be above the price quoted by the supplier/ product that would otherwise be the L-1, for the purpose of getting purchase preference. These directions were adopted by the circular dated 3.8.2017 issud by the Railway Board. In the instance case, the tabulation statement of the financial bids of all bidders was published on 13.5.2019. The petitioner herein had been categorised as L-4 whereas respondent nos.6, 7 and 8 had been placed in the category as L1, L2 and L3; respectively. As per the writ averments, the L-1, respondent no.6 (Krishna Bearings) is a trader importing procurement product from Walbar Corporation, Mexico, whereas L-2 and L-3 are local sources yet not approved by D.L.W (Diesel Locomotive Works), thus, only respondent no.6 (Krishna Bearing) could have outbid the petitioner herein. However, the respondent no.3 had included GST at the rate of 5% in the basic rate whereas the petitioner, and other bidders (L-5 and L-6) had quoted p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....attract the GST applicable as per the chapter, regardless of whether they are being supplied to the Railways. However, on a clarification sought by the petitioner under the Right to Information Act, the respondent no.1 has responded that the duty of relying on mentioning the correct HSN Code as per the GST Tariff was on the supplier/bidder and not on the tendering authority. The submission is that the petitioner had previously also raised the issue regarding non-incorporation of the relevant HSN Code in the tender document before the tendering authority. The purchase product manufactured by the petitioner falls under the Make in India Policy as the said product is 97.68% indigenously manufactured. In reponse to compliance condition no.1 (noted above), none of the bidders, except the petitioner herein had attached the Local Content Certificate to avail of the purchase preference for locally manufactured goods under the Make in India policy. Having failed to get a proper response from the respondents, the petitioner has approached this Court in the present writ petition with the following prayers:- (i) "a writ order or direction in the nature of mandamus commanding and directing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not quote the correct GST price is contrary to the public interest, in as much as, it gives licence to the tendering authority to act in favour of a particular bidder. Learned senior counsel appearing for the petitioner, thus, submits that a writ of mandamus be issued directing the tendering authority to indicate the HSN Code of the procurement product, i.e 'Turbo Wheel Impeller Balance Assembly' in the tender document itself as per GST Tariff in Chapter 84 as HSN Code no.84148030, to ensure a uniform bid from the tenderers and balance to provide a level-playing field to all bidders/tenderers, by including uniform GST rates in the base price. As far as the subject tender is concerned, learned counsel for the petitioner submits that the lis does not survive as the procurement product has been supplied subsequently to the respondent nos.1 and 2 under a fresh tender which has been secured by the petitioner herein. The life of the offer in question was 120 days and had expired during the pendency of the present writ petition in view of the interim order passed by this Court, whereunder the tender Committee had been restrained from issuing the purchase order under the subject ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tax structure/rate due to introduction of GST, shall be dealt with under Statutory Variation Clause." It is further clarified in Clause 2.8.6.2 that:- "The purchaser will not be responsible for payment of taxes and duties paid by the supplier under misapprehensions of law or misclassification." Clause 2.9.2 of the tendered document says:- "Tenderers must familiarize themselves about all the applicable taxes & duties, and in case the same is not indicated explicitly in their offer the same will be considered as inclusive. Any liability on such account will be payable on firms account." It is then submitted that the Railway Board had also issued a circular dated 5.9.2017 after implementation of GST Act that it shall be the responsibility of the tenderers/bidders to quote correct HSN number and its corresponding GST rate. The purchaser/tendering authority shall not be responsible for the misclassification of HSN number or incorrect GST rate, if quoted by the bidder/tenderer. All the tenderers/bidders have to ensure that they are GST compliant and quote tax structure/rates as per GST law and for this reason HSN code was not mentioned in the NIT (Notice Inviting Tender) and bid ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....art of the respondent no.1 to do so has resulted in incorrect selection/ranking of bidders. The tabulation statement of financial bids (extracted above) clearly shows that the petitioner had lost the bid, though being entitled to Make in India policy, on account of incorrect mention of GST rate by L-1, L-2, and L.3, 5% in place of 18%. Even otherwise, the subsequent tender no.101810202 finalised on 16.11.2019 for procurement of "Turbo Wheel Impeller" in favour of the petitioner herein, is inclusive of GST @ 18% . It is reiterated that the respondent no.1 is under obligation to provide uniform treatment to all bidders by mentioning HSN Code in the tender document so as to insist that they mention correct GST rates for selection in the tender process. Heard learned counsel for the parties and perused the record. There is no dispute about the fact that the petitioner is a local manufacturer recognized and included in the list of approved vendors maintained by the respondent nos.1 and 3. The petitioner has annexed a certificate of the product being indegeniously developed along with the tender documents. The opening of the subject tender, in the instant case, may not be possible as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damage in the Civil Court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical or procedural violation or some prejudice to self and persuade Courts to interfere by exercising power of judicial review should be resisted. The reason being that such intereferences may be interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. The Court cannot examine the details of the terms of the contract which has been entered into by the public bodies or the State. The Courts have inherent limitations on the scope of any such enquiry. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then the Court, cannot act as an appella....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o Lord Goldsmith - commitment to "rule of law" is the heart of parliamentary democracy. One of the important elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional." Paragraph '38' of the said report further reads as under:- 38. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This "legal certainty" is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of "level playing field". In light of the above legal position, on analysis of the facts and circumstances of the instant case, one of the points which arises for consideration is whether the classification of HSN Code is integral to the tendering process, i.e., whether it has an impact on the selection of tenderers or the choice of tenderers while ranking them after opening the financial bids. It is admitted to the respondent no.1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the product and is trying to shift its responsibility by saying that the levy of tax and imposition of penalty for mis-classification of HSN Code is an area of concern of the tax authorities. Considering the above, we find that the above explanation of railways is not satisfactory, in as much as, selection of bidder is made by inclusion of GST value in the base price. In the situation of any confusion regarding the applicability of correct HSN Code, the Railways ought to have sought clarification from the GST authorities about the correct HSN Code applicable to the procurement product. The respondent no.6 has also stated in its counter affidavit that the respondent no.2 should be instructed by this Court to come on record to state the GST rate and correct HSN Code in order to resolve all the controversies raised in the writ petition. The doubt arises, as respondent no.2 namley the General Manager, Diesel Locomotive Works, Varanasi has not given clear response. It is categorically stated in the counter affidavit of respondent no.6 that it is imperative for the respondent no.2 to come on record to confirm the HSN Code and GST rates which would clear all doubts once and for all with....