Rajasthan High Court - Jodhpur
M/S R And B Infra Project Pvt. Ltd vs State Of Rajasthan on 23 September, 2022
Bench: Manindra Mohan Shrivastava, Rekha Borana
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 15596/2018
M/s R And B Infra Project Pvt. Ltd., D-1, Building No. 6, Sat
Krupa Chs Ltd., Ground Floor 092 Under The Directorship Of Mr.
Ratansingh Motisingh Rathore, Through Authorized
Representative Power Of Attorney Holder Mr. Shivdan Choudhary
S/o Shri Mangilalji, R/o 8, Damodar Colony, Ram Mohalla, O/s
Nagori Gate, Jodhpur, Rajasthan- 342001
----Petitioner
Versus
1. State Of Rajasthan, Through The Principal Secretary,
Local Self Government Department, G-3, Rajmahal
Residential Area, C-Scheme, Near Civil Line Phatak, Jaipur
2. The Project Director, Rajasthan Urban Infrastructure
Development Project, (A Unit Of Rudsico), Avs Building
Jawahar Circle, Jln Marg, Jaipur- 302017.
3. The Additional Project Director, Rajasthan Urban
Infrastructure Development Project, (A Unit Of Rudsico),
Avs Building Jawahar Circle, Jln Marg, Jaipur- 302017.
4. The Executive Engineer, Rajasthan Urban Infrastructure
Development Project, Project Implementation Unit (Piu),
Mount Abu, District Sirohi, Rajasthan
5. The Junior Engineer, Rajasthan Urban Infrastructure
Development Project, Project Implementation Unit (Piu),
Mount Abu, District Sirohi, Rajasthan.
----Respondents
For Petitioner(s) : Mr. Sunil Joshi
For Respondent(s) : Mr. Vineet Jain, Senior Advocate
assisted by Mr. Praveen Vyas
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HON'BLE ACTING CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA
HON'BLE MS. JUSTICE REKHA BORANA
Judgment
23/09/2022
The brief facts of the case are as under :
Vide notification dated 19.06.2017, online bids were invited
by the respondent-Department for work of "Design and
Construction of Sewerage works (including left over work of
earlier contractor) along with Sewage Pumping station, 4 Nos.
new Decentralized Sewage Treatment Plants (STPs) and up-
gradation of existing 6 MLD STP for effluent quality improvement
including Operation services of the entire system for 10 years at
Mount Abu (Contract Package No.:RUSDP/Program/Mt.Abu/01)".
Clause 14.7 of Instructions to Bidders (ITB) provided as
under :
"14.7 All duties, taxes, and other levies payable by
the Contractor under the contract, or for any other
cause, as of the date 28 days prior to the deadline for
submission of bids, shall be included in the rates and
prices and the total Bid Price submitted by the Bidder."
In pursuance to the said notification, the petitioner-Company
submitted its bid on 24.08.2017. The bids were opened on
26.09.2017 and ultimately after negotiation, the 'Letter of
Acceptance' (LOA) was issued in favour of the petitioner-Company
on 10.01.2018. Clause 4 of the 'Letter of Acceptance' which is
bone of contention in the present matter provided as under :
"4. There has been reduction in GST from 18% to
12% during the bidding process (from the base date
for this package), therefore, a reduction on account
of GST will be made from each of your running bills."
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In pursuance to the said clause the amount qua GST @ 6%
is being deducted from each running bill of the petitioner-
Company, aggrieved of which the present petition has been
preferred.
The issue in question is whether the petitioner-Company
would be liable for deduction of 6% of amount qua GST from its
each running bill or not.
The case of the petitioner is that the bid for work in question
was submitted by the Company on 24.08.2017. Vide notification
dated 22.08.2017, the rates of GST were reduced by the Central
Government from 18% to 12%. Therefore, the petitioner-
Company submitted its bid keeping in consideration the rate of
GST applicable on that relevant date. Learned counsel for the
petitioner submitted that as on 24.08.2017, i.e., the date of
submission of online bid by the Company, the rate of GST was
12% per annum and therefore that would be the rate applicable
for the Company.
Learned counsel further submitted that after the opening of
the bids, negotiations were entered into between the Company
and the respondent-Department. In the said negotiations, it was
settled that the rates of GST would be the rates prevalent on the
date of entering into negotiations and therefore, relying upon the
said assurance, the petitioner-Company finalised the contract
agreement in terms of negotiated rates.
Learned Senior counsel appearing for the respondents has
raised a preliminary objection to the effect that the agreement as
entered into between the parties provides for arbitration clause
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and therefore, the present writ petition is not maintainable before
this Court.
So far as the said objection is concerned, firstly, no copy of
the agreement as entered into between the parties has been
placed on record by any of the parties which incorporates any
alleged arbitration clause; secondly, the alleged arbitration clause
has not even been reproduced in the reply to the writ petition and
thirdly, a bare perusal of the record shows that the issue in
question pertains to a clause in the 'Instructions to Bidders' and
not any clause of the agreement. Therefore, even if it is presumed
that the agreement incorporates any arbitration clause, the same
would not govern the present dispute. Resultantly, the objection
raised by the respondents is rejected at its threshold.
The next ground raised by learned Senior counsel appearing
for the respondents is that in terms of clause 14.7 of the
'Instructions to Bidders', the rate of any duty, tax or other levy
applicable would be the rate which was prevalent on the date 28
days prior to the last date for submission of bids. Learned Senior
counsel submitted that the said condition was very much a part of
the 'Instructions to Bidders' and it is the most natural presumption
that every bidder quoted its rates keeping into consideration the
said clause. Therefore, once the petitioner-Company having
submitted its bid and having entered into a contract with open
eyes cannot now claim any benefit contrary to the terms of the
contract or the pre-bid conditions. Learned counsel further
submitted that the deduction of 6% of GST from each running bill
of the Company is totally in terms of the contract agreement and
therefore is perfectly valid.
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So far as the ground raised by the petitioner that an
assurance was given by the department authorities in the
negotiation proceedings regarding the rate of GST to be the rate
prevailing on the date of negotiations is concerned, learned
counsel submitted that the issue regarding the GST rates was not
even discussed in the negotiation proceedings. The negotiations
were made only to the extent of the rates prescribed for work in
question and therefore, any such benefit sought to be claimed by
the petitioner in the garb of negotiation cannot be held to be
tenable.
Learned counsel appearing for the petitioner relied upon a
Full Bench decision of Bombay High Court in the case of New
India Industries Ltd and another Vs. Union of India and
another ; AIR 1990 Bombay 239.
Learned Senior counsel appearing for the respondent relied
upon a judgment passed by the Hon'ble Apex Court in Shyam
Telelink Ltd. now Sistema Shyam Teleservices Ltd. Vs.
Union of India ; (2010) 10 SCC 165.
Heard learned counsel for the parties and perused the
material available on record.
A perusal of the record makes it clear that the last date for
submission of bids for the work in question was extended from
time to time and ultimately the same was extended till
24.08.2017. Admittedly, the petitioner-Company submitted its bid
on 24.08.2017. It is also not in dispute that the rates of GST were
reduced vide the Central Government notification on 22.08.2017.
A perusal of the document (Annexure-5) placed on record by the
petitioner which is "Clarification to Bidders' Queries" shows that a
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specific query regarding the impact of GST was raised during the
pre-bidding process and the same was clarified by the Department
as under :
"Now Government has introduced Goods and Service
Tax (GST). Bidders will take into account the impact of
GST on works in their bid price."
A bare perusal of the above clarification makes it clear that
the bidders were specifically instructed to take into account the
impact of GST on works in their bid price. Meaning thereby, the
rate of GST was to be kept into consideration while making a bid.
Therefore, it is but natural that a bidder would keep in
consideration the prevalent rates of GST on the date of making a
bid.
Secondly, it is admitted on record that in the present matter,
the bid of the petitioner-Company was not accepted as submitted
by it vide its tender form/bid. The Company was directed to
submit a negotiated offer and after negotiations, the tender was
finalized in terms of the negotiated offer. Meaning thereby, there
were negotiations entered into between the parties pertaining to
the rates of work and the same were finalized in terms of the
negotiated offer. After the said finalization, the Letter of
Acceptance(LOA) dated 10.01.2018 was issued in favour of the
Company and on the very next day, vide letter dated 11.01.2018,
an objection regarding the reduction of 6% of GST amount from
its running bills was raised by the petitioner-Company specifically
stating that the negotiated offer of the Company was based on the
GST @ 12% and the same having been accepted by the
Department, it cannot now impose any condition to the contrary.
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Although, the statement of the Company regarding the negotiated
offer being based on GST rate @ 12% has been denied by the
Department but no document to substantiate the said submission
has been placed on record. The alleged negotiated offer dated
10.10.2017, which admittedly was submitted by the Company to
the Department has not been placed on record and therefore, this
Court cannot hold in favour of the Department that the negotiated
offer did not relate to the rates of GST.
It is also an admitted position on record that the rates of
GST were reduced on 22.08.2017 and the respondent-Department
is liable to pay the GST @ 12% only. Therefore, the respondent-
Department being a State instrumentality cannot be permitted to
collect a tax over and above the amount it is required to pay. The
same would clearly amount to an unjust enrichment and
therefore, cannot be held to be permissible in terms of the settled
proposition of law. In New India Industries Limited's case
(supra), the Division Bench of Bombay High Court held as under :
"14.-----------
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The mandate of Article 285 of the Constitution is that there must always be a valid law for making assessment and recovery of a tax. An assessment of a tax would be illegal when (a) the relevant legislation transgresses the constitutional limitations or (b) it is contrary to the provisions of the taxing law in question. Since no tax can be levied or collected except by authority of law, the Government has a duty to refund any sum collected without authority to the person who paid the said tax."
The Court further held as under :
"15. It is equally settled law that an application under Art.226 of the Constitution would lie for enforcing the (Downloaded on 26/12/2022 at 01:47:43 PM) (8 of 8) [CW-15596/2018] obligation of the State to refund and/or return the money-collected towards an illegal tax or duty."
So far as the judgment relied upon by the learned counsel for the respondent is concerned, the ratio as laid down in the said judgment would not be applicable in the present matter as the same was a specific case of non-compliance of the pre-conditions for performance of a contract. In that case, admittedly, the Company could not commence the work within the stipulated period and therefore, liquidated damages were sought to be recovered by the Department, which was held to be valid by the Hon'ble Apex Court. The present matter not being a case of non- compliance of any of the condition/pre-condition of contract, cannot be governed by the said judgment.
In view of the above observations, the present writ petition deserves to be and is allowed. Condition No.4 of Letter of Acceptance (LOA) dated 10.01.2018 is hereby quashed. The respondent-authorities are directed not to deduct 6% of GST from the future running bills of the petitioner-Company and to further refund the amount of 6% GST to the petitioner-Company already deducted from its previous running bills. (REKHA BORANA),J (MANINDRA MOHAN SHRIVASTAVA),ACJ 55-Vij/-
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