AI Drafter 
TaxTMI 
TaxTMI 
2025 (12) TMI 444
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....ter referred to as "DSHM"). The petition further seeks to set aside any action taken consequent to the award of contract/rank from L1-L2. The petition also seeks to set aside the subject tender issued by DSHM. BRIEF FACTS:- 2. Briefly, facts as culled out from the petition and germane to decide the lis are as under:- a. Petitioner claims to be a leading provider of in-vitro diagnostic solutions and a global supplier of transformative innovative solutions across major disease areas since the year 1988 when it was incorporated. It claims to be a leading supplier of blood screening NAT systems in many institutions like AIIMS, SMS Jaipur, KGMU and SGPGI Lucknow, etc. b. DSHM issued the subject tender on 13.12.2024 for a rate contract for supply, installation and maintenance of fully automated NAT facility and, inter alia, for supply of reagents, solutions, sample cups, cuvettes and/or other consumable items required to perform the tests listed in the tender. A pre-bid meeting was held by DSHM with the prospective bidders on 20.12.2024 wherein petitioner sought certain clarifications. It is stated that in pursuance thereto, the DSHM issued two corrigenda on 27.01....
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.... learned senior counsel would contend that the financial rates are purely for the services to be rendered and have no correlation with the taxes etc., especially GST. In other words, he contended that clause 6 directs bidders to quote "Cost Per Reportable Test" (hereinafter referred to as "the CPRT") which necessarily includes various services to be offered without the taxes involved. According to him, it is this CPRT without taxes which is the determinative quote to be considered by the DSHM. 5. To buttress the aforesaid contention, learned senior counsel draws attention to the "Method of Tender Evaluation and Price Comparison" of the subject tender which provides insight into the procedure to be followed by DSHM while comparing the financial bids of the bidders. According to him, this clause clearly directs a bidder to quote only CPRT, which is exclusive of any element of tax and further mandates that L-1 would be decided as per "CPRT" performed considering the annual blood donation of 38,000 tests. He thus would contend that both the clauses, i.e., clause 6 read with the method of evaluation, manifestly require the bidders to quote only and only the CPRT and the element of an....
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.... contended that purposely or with an oblique motive, respondent no. 2 did not specify as to whether its CPRT of Rs. 945/- is or is not inclusive of GST which was mandatory according to him. He would contend that in case it was without GST then the final price of respondent no. 2 would be higher than that of the petitioner, which is Rs. 946.13 (Rs. 802 + 18% GST). According to him, the mandatory fields not having been entered, financial bid of respondent no. 2 ought to have been rejected at the threshold itself. 8. He further contended that what is more intriguing is the acceptance of such a defective and non compliant bid by DSHM and that too with an Indemnity Bond. Learned senior counsel pointed out that while the successful bidder was yet to be finalised by the DSHM, for some unknown reason, respondent no. 2 was required by the department to furnish an Indemnity Bond unilaterally. He forcefully contended that not only was this contrary to the terms of the subject tender but also violative of principles of transparency and fairness inasmuch as, no such opportunity was offered to the petitioner. He stoutly would contend that the arbitrariness and partisan behaviour of DSHM in aw....
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....d on that basis, the award of contract should be quashed. 9. Learned senior counsel while referring to clauses of the subject tender at page 49 of the paperbook submitted that the terms specified therein are not in consonance with the specific details sought in Annexure 9. According to him, these are general instructions and the details sought in Annexure 9 are particular and specific to the requirements of the contract which are sanctimonious and ought to be adhered to. He would contend that once it is demonstrated that respondent no. 2 violated the specific terms of the subject tender, its bid ought to be held to be ineligible or non compliant and resultantly, the contract be quashed. 10. Mr. Rao, learned senior counsel also invited attention to the statement made by DSHM before this Court and recorded in order dated 09.04.2025 to submit that the instructions received, itself displayed dishonesty. Though on 09.04.2025 it was stated that the work had commenced in both the Hospitals on 30.03.2025, yet, in the counter affidavit of respondent no. 2 it was admitted that the testing machine was installed in Lok Nayak Hospital only on 29.04.2025 and the testing services commenced ....
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.... or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important; (4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality; (5) past experience of the tenderer and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow-up action, rectify defects or to give post-contract services. Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction." Michigan Rubber (supra):- "23. From the above decisions, the following principles emerge: (a) The basic requirement of Article 14 is fairness in action by the State, and non-a....
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....n the interest of the public by awarding the contract to the respondent no. 2 whose rates were found to be lower of the two. He candidly submitted that the overall difference in cost worked out only to Rs. 50,000/- which indicates that there is no substantial benefit that the State may have obtained by awarding the contract to the petitioner. He would also contend that the petitioner has neither challenged the capability nor other merits of respondent no. 2 in terms of performance or equipment etc. In which case, according to him, it was the prerogative of the State to choose the best bidder. He contended that the price variation not being substantial, this Court would not interdict the tender process merely because the petitioner too could have offered the same services. 14. So far as the allegation of partisan or pre-determined decision to award the contract to respondent no. 2 is concerned, he vehemently opposed the same. He would contend that the only issue canvassed by the petitioner is in respect of the GST payable and as to whether the rates quoted by respondent no. 2 were or were not inclusive of GST. He had a very precise and concise reply to that. He contended that whe....
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....g to him, assuming without admitting the contention of the petitioner on this score, keeping in mind Rs. 945/- as exclusive of GST, nothing prevented DSHM from negotiating with respondent no. 2 to include GST within that price. He contended that though this was not required, however, this aspect is being urged only to demonstrate the hollowness of the contention of the petitioner. 17. Primarily, Mr. Vashisht would contend that price to be quoted being inclusive of GST, the issue of CPRT being inclusive of GST or not as per Annexure 9, was not a mandatory consideration for DSHM, while finalising the tender process. In that, the price of petitioner even after seeking clarification was quoted as Rs. 802/- + 18% GST = Rs. 946.13 on its assumption that 18% GST was chargeable, while respondent no. 2 in its clarification stated that no GST is payable and its quote still remains at Rs. 945/-. Though, DSHM received the reply of the GST department that GST is chargeable, yet, respondent no. 2 having quoted a lower price, was found suitable and since it offered the Indemnity Bond to indemnify DSHM from levy of GST, DSHM found the price suitable and awarded the contract. According to him, t....
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....28.06.2017, particularly entry at Sl. No. 74, he forcefully contended that the services offered to be provided by respondent no. 2 squarely fell within the exemption of GST attracted to the said entry. He would contend that it was on that basis that respondent no. 2 offered a CPRT of Rs. 945/-. According to him, the entire confusion arose purely on the basis of the petitioner's misunderstanding of the applicability of GST to the services sought for by DSHM. He would contend that if the petitioner had understood the terms of the subject tender correctly, there would be no occasion for filing the present writ petition. 21. He fairly conceded that respondent no. 2 had indeed furnished the indemnity bond, however, the same was furnished as an abundant precaution to save itself from any purported infraction of GST procedures as also that DSHM would not find fault with respondent no. 2 on that count. He would contend that as to whether GST would have to be eventually paid by respondent no. 2 or not is a question which may arise in future if the GST Department deems it fit. He also contended that respondent no. 2, though is depositing the GST, would at a future date possibly seek refun....
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....ause 2.7.6, undoubtedly, the bidders and the tenderers, while quoting the rates, were to clearly indicate the rate of applicable duties and taxes included in the price quoted by them. Let us pause for a moment and analyse its true meaning. Under the said clause, the bidders were to quote the rate of applicable duties and taxes, which were included in the price quoted by them. This clause must be read in conjunction with Clause 2.8.6, which provides that the purchaser (appellants) will not be responsible for the payment of taxes and duties paid by the supplier, on the basis of the misclassification or a misapprehension of law. This would mean that the appellants as purchaser was making it clear that it will have no liability to shoulder, in the payment of tax if it is found that, while indicating the rate of applicable duty or tax by the tenderer, it has wrongly quoted a rate which is lower than the rate, which it was liable to pay in law. The quoting of the rate, in other words, by the tenderer, within the meaning of Clause 2.7.6, would bind the tenderer and he would not be heard to say that he had arrived at the rate and made the bid and which stood accepted, on the basis of misap....
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....y to pay tax under the GST regime is on the supplier. He must make inquires and make an informed decision as to what would be the relevant HSN Code applicable to the items and the rate of tax applicable. Thereafter, when he makes the bid, the issue of competition for winning the bid, would come into clear focus. The goal of the bidder ordinarily is to emerge successful and bag the contract. The extent of profit that he would earn, is a matter, which is essentially a matter to be decided by him. He may, for germane reasons, wish to bag a contract, with situations ranging from one extreme end of the spectrum viz. even when the prospect of a loss stares at him, or a slightly brighter outcome viz. the contract working on a break-even basis or moving on to an even more optimistic possibility, namely, of the contract earning him profit, which he is willing to take at a modest rate or a rate which he considers as reasonable in his understanding and circumstances. This is a matter to be left to the commercial expediency of the bidder. Now, when the matter is viewed from the perspective of the purchaser, the purchaser seeks to buy goods and services or both by awarding the contract to the l....
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....rom what it had originally stated in the tender document. In that, originally in Annexure 9 of the tender document, the respondent no. 2 had indicated the CPRT of Rs. 945/- without any GST, while in para 19, respondent no. 2 has twisted the facts to now say that Rs. 945/- is inclusive of GST and the original price of CPRT quoted ought to be reckoned at Rs. 800.85/-. He vehemently contended that this would amount to alteration of its original bid and consequentially the award of contract dated 30.03.2025 indicating the price at Rs. 945/- inclusive of GST, is a material variation of the tender terms and cannot be allowed. If that be so, according to learned senior counsel, both DSHM as well as respondent no. 2 had violated the mandatory conditions and resultantly the award of contract dated 30.03.2025 ought to be quashed and set aside. Resultantly, the petitioner ought to be awarded the contract. ANALYSIS & CONCLUSIONS:- 24. We have heard Mr. Rao, learned senior counsel for the petitioner, Mr. Sameer Vashisht, Standing Counsel for DSHM and Mr. Mr. Sandeep Chilana, learned counsel for respondent no. 2, perused the records including the tender document. 25. According to us, fr....
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....of Finance and relied upon by the respondent no. 2 is concerned, having regard to the latest clarification tendered by the GST Department itself affirming 18% GST chargeable on the services sought, we are impelled to rely on the said clarification being "contemporanea expositio". Moreover, we are not called upon to decide the correctness of the Notification or the clarificatory letter issued by the same department. Ergo, the issue as to whether the 18% GST is chargeable or not is answered in the affirmative. That said, we now need to consider as to whether for the purposes of selecting the L-1 bidder, the CPRT without GST is essential or whether price with GST inclusive would be relevant. 27. Having reached the aforesaid conclusion, so far as the 1st issue is concerned, we would now advert to the 2nd issue as to whether the DSHM has award the contract to respondent no. 2 vide letter dated 30.03.2025 without violating the terms of the subject tender. 28. Great emphasis was laid by the petitioner upon the details to be indicated and entered in Annexure 9 of the tender document which according to it, was mandatory. In order to appreciate the said contention, it would be apposite....
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....o seek clarification from the GST Department. As observed above, by the letter dated 25.03.2025, the GST Department clarified that for the services sought under the tender document, 18% GST was chargeable. 31. In the above backdrop, we have to consider what were the options available to DSHM to take an informed decision. In that context, it would be significant to consider the relevant clauses of the tender document. Sub-clauses (ii) & (iv) of Clause II of tender document are extracted hereunder: "II. Taxes & Duties:- i. xxx xxx xxx ii. The prices shall be inclusive of all taxes & duties leviable including GST and Entry tax etc. and the Purchaser shall not be liable for the same. iii. xxx xxx xxx iv. If any rates of tax are increased or decreased, a new tax is introduced, a existing tax is abolished, or any change in interpretation or application of any occurs in the course of the discharge of contract, which was or will be assessed on the bidder in connection with discharge of the contract, an equitable adjustment of the contract price shall be made to fully take into account any such change by addition to the contract price or deduc....
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....tender conditions particularly sub clauses (ii) and (iv) of Clause II of the tender document, it would not be sustainable so far as DSHM is concerned. This is for the reason that though Annexure 9 definitely requires the bidders to give CPRT with and without GST, yet the final rate is reckoned inclusive of GST. Sub Clause (ii) has to be given its plain and natural reading and therefore, the DSHM is to consider a price inclusive of all taxes with no corresponding liability upon itself to set off or reimburse the same to any successful bidder. If the said sub clause (ii) is not read in the above manner, the same would be rendered otiose and nugatory. This surely cannot be the manner in which a particular term or a condition of a contract can be interpreted. It is trite that the tender conditions or conditions of any particular document have to be read harmoniously so as to further the cause or benefit arising to a party in the said document. In the present case clearly the DSHM is not only the tendering authority but also is entering into a commercial transaction with private entities and would be at liberty to choose what is best to suit its requirement. The fact that sub clause (ii....
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....er, Purchase, Finance and such other members Competent Authority may like to nominate. The lowest quoted technically qualified bidder/ bidders will be considered as L1 and called for negotiation, if required, to enter into the rate contract." 37. Though the provision appears to be in respect of L-1 bidders, in such peculiar and exceptional circumstances as have occurred in the present case, due diligence and care on the part of the officials of DSHM ought to have been taken. Fairness and transparency in the process and procedure involved in tenders and that too while evaluation by a State or its authority, are the minimum basic and paramount underlying principles not only expected from such public authorities, but are binding. When such expectations are not met by public authorities, it ordinarily brings disrepute to the tender procedure. Due care ought to be taken to avoid such affliction. 38. A controversy was also brought forth by the petitioner by referring to the order dated 09.04.2025, wherein it was noted that a written statement was tendered on behalf of DSHM that respondent no. 2 had already commenced its operations in both the hospitals, namely, Lok Nayak Hospital, ....