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2020 (12) TMI 746
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....t of Turbo Wheel Impeller Balance Assembly 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 conte....
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....tender or other procurement solicitation. 'margin of purchase preference' means the maximum extent 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 cont....
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....ill also be applicable to the subject tender. The Union of India had issued directions to all ministries, Departments & C.P.S.Us that in all procurements, preference shall be given 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....
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.... the GST Council, it was clarified that only those goods specifically classified under Chapter 86 would attract GST at the rate of 5% of the base price. Whereas other products/ goods specifically classified under other chapters would 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....
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....te. The denial to discharge the said responsibility by respondent no.1 has lead to unfair trade practices, in as much as, the tenderers took unfair advantage by quoting a GST rate which is substantially lower than the applicable GST rate. Accepting bids of those who do 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....
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....documents. Clause 2.7.6 of Amendment no.1 of the bid document has been placed before us which reads that:- "All the bidders/tenderers while quoting the rates should clearly indicate the rate of applicable duties and taxes included in the prices quoted by them. Any variation in 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 respo....
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....GST/SGST/Act, the Railway has to deduct the applicable GST from the bills under reverse charge mechanism (RCM) and deposit the same to the concerned tax authority. The duty of Railways/respondent no.1 was, thus, to seek ratification/clarification from the GST authority as to the GST rates payable. Failure on the part 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....
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....luating tenders and awarding contracts are essentially commercial functions. If the decision relating to award of contract is bonafide, the Court in exercise of the powers of judicial review will not interfere, even if a procedural aberration or error in assesment or prejudice to a tenderer is made out. The power of judicial 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 inh....
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...., to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field". According to 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, ....
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....spondent no.6 (L-1), which is according to HSN Code of the product in Chapter 86 of GST Tariff. The petitioner herein claims that the correct GST rate should be 18% and the HSN Code which falls under Chapter 84 of GST Tariff would be applicable. Whereas the respondent no.1, Railways in the counter affidavit filed by them did not clarify the correct HSN Code or GST rate of 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 raise....