M/S Bipson Surgical(India) Pvt. ... vs State Of Gujarat on 27 March, 2018
Gujarat High Court
M/S Bipson Surgical(India) Pvt. … vs State Of Gujarat on 27 March, 2018 Bench: M.R. Shah, A.Y. Kogje
C/SCA/16765/2017
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16765 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 16773 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 17991 of 2017
JUDGMENT
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH Sd/− and
HONOURABLE MR.JUSTICE A.Y. KOGJE Sd/− =============================================
- Whether Reporters of Local Papers may be allowed to see Yes the judgment ?
- To be referred to the Reporter or not ? Yes
- Whether their Lordships wish to see the fair copy of the No judgment ?
- Whether this case involves a substantial question of law as No to the interpretation of the Constitution of India or any order made thereunder ?
= = = ==== = = == = = = =============================== M / S B I PSON S URGIC A L ( INDIA ) PVT . LTD . , Versus STATE OF GUJARAT ============================================= Appearance:
Special Civil Application Nos.16765/2017 & 16773/2017 MR SI NANAVATI, SR. ADVOCATE with M S A NUJA S NANAVATI ( 5229 ) for the PETITIONER ( s ) No . 1 , 2 Special Civil Application No.17991/2017 MS MINU SHAH, ADVOCATE for the PETITIONER(S) Special Civil Application Nos.16765/2017, 16773/2017 & 17991/2017 MR KAMAL TRIVEDI, A DVOCA T E GENERAL with MS SANGITA VISHEN , ASSISTANT GOVERNMENT PLEADER / P P ( 99 ) for the RESPONDENT ( s ) No . 1 D S A F F . NOT F I L ED ( N ) ( 11 ) for the RESPONDENT ( s ) No . 1 MR M I TUL K SHELAT ( 2419 ) for the RESPONDENT ( s ) No . 2 ============================================= C O R A M : H O N O U R A B L E M R . J U S T I C E M . R . S H A H a n d HONOURABLE MR.JUSTICE A.Y. KOGJE Date : 27/03/2018 C/SCA/16765/2017 JUDGMENT COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] RULE.
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M s . S a n g i t a V i s h e n , l e a r n e d A ssis t an t G ov e r n m e nt Pleader waives service of notice of Rule on behalf of the respondent No.1 and Shri Mitul Shelat,
learned Advocate waives service of notice of Rule on behalf of the respondent No.2.
[ 1 . 1 ] A s commo n quest i on o f law and facts ar i s e i n thi s group o f petitions, they are disposed of by this common judgment and order.
[ 2 . 0 ] B y wa y o f th i s p etition u n d er Ar t icle 226 of th e C o n s t it u t i o n o f I n dia , t h e r e s p ective petition e rs ha v e p r a y e d fo r an a ppropri a te w r i t , d i recti o n and order quas h ing a n d s e tt i n g as i de t h e i mp u g ned de c i s ion s / o r de r o f th e r e sp o n d e n t N o . 2 – G uj a r at M e d i ca l S e r v i c e s Corporation Ltd. (hereinafter referred to as “GMSCL”) being Email Ref.No.GMSCL/DRUG/2017 − 1 8 / a s w e l l a s g i v e e f f e c t t o t h e 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 ] B y w a y of a me n dment the petitioners have also praye d t o quash and set aside the impugned decision of the respondent No.2
– G M S C L b e i n g A g en d a I t e m N o . 2 2 / 1 5 a n d A g e n d a I t e m N o . 2 2 / 2 5 of the Minutes of 22nd Meeting of the Board of Directors of GMSCL dates 23.08.2017.
[ 3 . 0 ] F o r t h e s a k e o f c o n v e n i e n c e , S p e c i a l C i v i l A p p l i c a t i o n N o . 1 8 7 6 5 / 2 0 1 7 i s t r e a t e d a s a l e a d m a t t e r a n d t h e f a c t s i n t h e s a i d Special Civil Application are narrated which are as under:
[3.1] That the petitioners are engaged in the business of C/SCA/16765/2017 JUDGMENT 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. from different manufacturers and distributors for the supply of the same to the Government Hospitals throughout the State of G u j a r a t . T h a t t h e G M S C L i n v i t e d t h e t e n d e r s f r o m t h e e l i g i b l e suppliers to supply different items. The petitioners awarded the contracts and were asked to supply 5 different items bearing Item Code 4006, 4024, 4009, 4010 and 4185. That
th e p a r t i c u l a r s o f t h e r e s p e c t i v e o n l i n e t e n d e r s a n d awarding the contracts in favour of the petitioners are as under:
1. That on 22.07.2015, respondent No.2 GMSCL had invited Online Tenders bearing Tender Notice No.D −02/2015 −2016 and Tender Enquiry No.GMSCL/D−576/RC/2015−16 ( O N R A T E C O N T R A C T B A S I S ) f r o m a l l r e p u t e d M a n u f a c t u r e r s / D i r e c t i m p o r t e r s o f D i s p o s a b l e D e l i v e r y K i t ( E T O S t e r i l i z e d ) . T h a t t h e p e t i t i o n e r s h a d f i l l e d t h e T e n d e r F o r m f o r I t e m C o d e No.4185 i.e. Disposable Deliver Kit (ETO Sterilized) and had submitted Technical and Commercial Bid for which petitioners were awarded the tender through Acceptance
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Letter dated 07.10.2015. Rate Contract bearing No.GMSCL / Drugs / RC / 576 −4185 / C − 166 /66596−66607/2015016 was entered on 28.10.2015 which was valid up to 30.09.2016 which came to be further extended up to 31.05.2017.
- That on 10.11.2015, the respondent No.2 GMSCL had invited Online tenders bearing tender Notice No.D −03/2015 −2016 and Tender Enquiry No.GMSCL/D −582/RC/2015 −16 (ON RATE CONTRACT BASIS) from all reputed Manufacturers/Direct importers of Cotton Crepe Bandage, absorbable surgical suture catgut etc. That the petitioners had C/SCA/16765/2017 J U D G M E N T f i l l e d t h e T e n d e r F o r m f o r I t e m C o d e N o . 4 0 0 9 i . e . C o t t o n Crepe Bandage (Size 10 cm * 4 mtr) & Item Code No.4010 i.e. Cotton Crepe Bandage (Size 6 cm * 4 mtr) and had submitted Technical and Commercial Bid for which petitioners w e r e a w a r d e d t h e t e n d e r t h r o u g h A c c e p t a n c e Letters dated 14.03.2016. Rate Contract bearing No.GMSCL / Drugs / RC / 582 −4009 / C − 8 /24559 −70/2016 −17 for Item Code No.4009 and Rate Contract bearing No.GMSCL / D r u g s / R C / 5 8 2 −4 0 1 0 / C −9 1 / 2 4 5 7 1 −8 2 1 / 2 0 1 6 −1 7 f o r Item Code No.4010 were entered on 07.04.2016 which were valid up to 28.02.2018.
- That on 17.02.2016, respondent No.2 GMSCL had invited Online tenders bearing tender Notice No.D −04/2015 −2016 and Tender Enquiry No.GMSCL / D −588 / RC / 2015 − 1 6 ( O N R A T E C O N T R A C T B A S I S ) f r o m a l l r e p u t e d M a n u f a c t u r e r s / Direct importers of Bandage Cloth, Rolled Bandage etc. That the petitioners had filled the Tender Form for Item Code No.4006 i.e. Bandage Cloth with ISI Mark & Item Code N o . 4 0 2 4 i . e . R o l l e d B a n d a g e ( 5 m t r * 5 c m ) w i t h I S I M a r k 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 / 588 −4006 / D −166 / 68536 −68547 /2016 −2017 for Item Code No.4006 and Rate Contract bearing No.GMSCL / Drugs / RC / 588 −4024 / D −93 /64815 −64826 / 2016 − 2017 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 C/SCA/16765/2017 JUDGMENT tender terms, the petitioners were asked to provide rates pre−packing unit (without applicable VAT / CST) as well as provide percentage of VAT / CST, if a p p l i c a b l e i n d i f f e r e n t c o l u m n s . A cc o r d i n g t o t h e p e t i t i o n e r s , a s p e r C l a u s e 1 3 ( b ) 9 o f t h e r e s p e c t i v e 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 pre −packing unit (without applicable VAT / CST). Thus, according to the petitioners, VAT / CST were to be borne by the GMSCL which although were recovered by the petitioners but was indeed paid to the State Government or appropriate Authority on behalf of the GMSCL.
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[3.3] It appears that on 12.04.2017, based on recommendation of GST Council, Parliament had p a s s e d C e n t r a l G o o d s a n d S e r v i c e s Tax (CGST) Act, 2017 (hereinafter referred to as “CGST Act”), The Integrated Goods an d S e r v i c e s T a x ( I G S T ) A c t , 2 0 1 7 , T h e U n i o n T e r r i t o r y G o o d s and Services Tax Act, 2017 and The Goods and Service Tax (Compensation to States) Act, 2017 (hereinafter referred to as “GST Act”). That the aforesaid laws were given effect from 01.07.2017. It appears that by the aforesaid laws / Acts, the taxes levied and collected by the Centre such as Central Excise Duty, Duties of Excise (Medicinal and Toilet Preparations), Additional Duties of Excise, Additional Duties of Customs, Special Additional D u t y o f C u s t o m s , S e r v i c e T a x a n d C e n t r a l S u r c h a r g e s a n d C e s s h a v e b e e n s u b s u m e d i n G S T . S i m i l a r l y , t h e t a x e s l e v i e d and collected by State such as State VAT, Central Sales Tax, Entry tax, Luxury tax, E n t e r t a i n m e n t a n d A m u s e m e n t T a x , t a x e s o n adv e r t i s e m e n t e t c . h a v e b e e n s u b s u m e d i n G S T . I t i s t h e c a s e o n b eha l f o f t h e p e t i t i o n e r s t h a t i n v i e w o f t h e i n t r o d u c t i o n o f t h e G S T and the rate of GST and change in tax structure, on 26.05.2017, C/SCA/16765/2017 JUDGMENT t h e p e t i t i on e r w r o te a l e t t e r t o t h e M a n ag i n g D i r e c t o r o f t h e G M S C L b y w h i c h t h e p e t i t i o ne r s a s k e d t h e G M S C L t o c o n s i d e r n e w GST Rates which would be applicable to the product supplied by the petitioners and pay the duty amount, if any. That vide communication dated 14.07.2017, GMSCL had asked the petitioners to provide applicable GST to the products that were supplied by the petitioners to the respondent No.2 GMSCL alongwith HSN Code. That the petitioners replied vide communication dated 29.07.2017 and provided the information s o u g h t i n t h e p r e v i o u s e m a i l d a t e d 1 4 . 0 7 . 2 0 1 7 . T h a t a d d i t i o n a l l y t h e p e t i t i o n e r s a l s o s t a t e d i n t h e i r l e t t e r t h a t G S T w a s a p p l i c a b l e a t 1 2 % t o t h e p r o d u c t s t h e p e t i t i o n e r w a s s upp l y i n g t o G M S CL . T h e pe t i t i o ne r a l s o requ e st e d the G M S C L to m ak e a p p r o p r i a te c hang e s or a c c o m m o d a t e t h e n e w t a x r a t e s w h i c h w e r e a p p l i c a b l e t o t h e products that were supplied by the petitioner to respondent No.2 GMSCL. According to the p e t i t i o n e r s , o n 1 4 . 0 8 . 2 0 1 7 , t h e petitioners wrote 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 c ommu n ic a t io n d a ted 3 1 . 0 8 . 20 1 7 , the GMSCL ha d as k ed the p etit i oners to ma k e nec e s s ary a r range m e n t / a m e n d m en t s i n the i r pr i c e f o r t h o s e item s wh i c h p e tit i one r s w e r e sup p l y i n g . T h a t i n t h e m ea n t i m e t h e GMSC L in it s m eet i ng h e l d o n 23 . 08 . 2 017 wherein tw o A genda Item s i . e . A g e n da I t e m N o . 2 2 / 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 C/SCA/16765/2017 JUDGMENT G M SCL will flo a t fresh tender and as per the agreement terms and
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conditions for the existing rate contract for such items”.
[ 3 . 4 ] F e e l ing a g g riev e d and dissatisfied wi t h t h e i m p u gned decision in the communication dated 31.08.2017 (Annexure −A) by which the petitioners were r e q u e s t e d t o m a k e a v a i l a b l e t h e i r consent in connection of agreement to supply as per the GST rates, without increasing the existing rates and the impugned decision taken by the GMSCL in Agenda Item Nos.22/15 and 22/25 by which it has been decided to seek consent of firms for supply of the items as per the rate contract, the petitioners have preferred the present Special Civil Application under Article 226 of the Constitution of India.
[4.0] Shri S.I. Nanavati, learned Senior Advocate has appeared on behalf of the petitioner of Special Civil Application Nos.16765/2017 and 16773/2017 and Ms. Minu Shah, learned Advo c a t e h a s ap p e a red on behalf of the petitioner of Special Civil Appli c a tion No . 17991 / 2017 . Shri Kamal Trivedi , learned Advocate General has a p peared with Ms . Sangita Vishen , learned Assistant Government Pleader appearing on behalf of the respondent – State Gujar a t and Shri Mitul K . Shelat , learned Advocate has appeared on behalf of the respondent No.2 – GMSCL.
[ 5 . 0 ] S h r i N a n av a t i , learned Counsel appearing on behalf of the petitioners has taken us to the relevant clauses / conditions of the ten d er docum e nts more particularly Clauses 13 , 44 , 49 . He has also taken us to the relevant clauses of Rate Contract more particularly Clause 43 of the Rate Contract.
[5.1] It is submitted by Shri Nanavati, learned Counsel appearing C/SCA/16765/2017 JUDGMENT o n behalf of the petiti o ners that as such as per the tender c o n d i t i o n s t h e p e t i t i o n e r s w e r e a s k e d t o p r o v i d e r a t e s p r e −p a c k i n g u n i t ( w i t h o u t a p p l ic a b le VAT & C S T ) a s w e l l a s pro v i d e pe r c enta g e of VAT / CST, if applicable, in different columns. It is submitted that as per Clause 13(b)(ix) of the tender documents as well as Bidding Schedule attached to the tender documents, petitioners were required to include Excise Duty, Packing, Forwarding, Insurance Charges
e t c . i n p r e −p a c k i n g u n i t ( w i t h o u t a p p l i c a b l e VAT / CST). It is submitted that therefore the VAT / CST were to be borne by the GMSCL which although were recovered by the petitioners but was indeed paid to the State Government or appropriate Authority on behalf of the GMSCL. It is submitted that by impugned communication dated 31.08.2017 and the illustration, the GMSCL has forced the
petitioner to reduce the contract rate / rates pre−packing unit (without applicable VAT / CST) from Rs.100 to Rs.93.74 as per the calculation given in the impugned order / decision b e c a u s e o f t h e i n t r o d u c t i o n o f C G S T 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 t h e r a t e s p r e −p a c k i n g u n i t w h i c h w e r e
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o f f e r ed b y t h e p e t i t i o n e r s a n d w h i c h c a me to b e a c c e p t e d b y t h e G M S CL , t he r eaf t e r c a n n o t b e r e v i s e d u n d e r a n y p r e t e x t o r r e a s o n , including in case of revision of duty / Excise / cost. It is submitted that by impugned c o m m u n i c a t i o n d a t e d 3 1 . 0 8 . 2 0 1 7 a s s u c h t h e GMSCL has asked the petitioners to reduce the rates pre −packing unit (without applicable
V A T / C S T ) a g a i n s t t h o s e m e n t i o n e d i n t he a c c ep t ance le t t e r a n d r a t e c o n t ract to cove r 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 C/SCA/16765/2017 JUDGMENT petitioners that from the illustration provided in the impugned communication dated 31.08.2017, it is evident that the pre−GST rates have been shown in which basic rate i.e. pre −packing unit ( w ithout applicab l e V A T / CS T ) has been t aken as Rs . 100 on which 5% VAT or CST was applicable and the final amount of the product was Rs.105/ −. It is submitted that against which post−GST rates have been shown in which basic rate that
is pre −packing unit (without applicable VAT / CST) has been reduced to Rs.93.74 on w h ic h 6% SGST i . e . Rs . 5 . 63 and 6% CGST i . e . Rs . 5 . 63 is applied an the final amount of the product is kept at Rs.105/−. It is submitted that however the petitioner is directed to mention the rate at Rs.93.74 (instead of Rs.105) which as such was not
t h e agreed contract rate . It is submitted that therefore the impugned decision d a t ed 31 . 08 . 2017 i s absolutely i l legal and contrary to the terms and conditions and the relevant clauses of the tender documents as well as the rate contract. It is f u r t h e r s u b m i t t e d b y S h r i N a n a v a t i , learned C o un s el a ppea r in g on behalf of the petitioners that so fa as other States are concerned and other Corporations in other State such as Rajasthan Medical Services Corporation Ltd., Tamilnadu Medical Services Corporation Ltd., Kerala Medical Services Corporation Ltd. have considered the change in tax structure and have granted the benefit by revising the rate contracts to the suppliers.
[ 5 . 2 ] Shri N anav a ti , l e a rned C o u n s e l a pp e a r i ng o n be h a l f o f the pe t i t i o ne r s h a s f u r t h e r s u b m i t t e d that e v e n t h e i m p u g n ed d e c i si o n tak e n b y t h e G M S C L i n A g e n d a I t e m N o . 22 / 1 5 i n i t s m e e t i n g he l d o n 2 3 . 08 . 2 017 is c onc e r n ed , the s a m e i s absol u t e ly unr e as o n a b l e , illegal and irrational. It is submitted that the said resolution do not contain any reasons w ha t s o eve r f or not gi v ing any e f fec t to the enactment in the CGST and GST. It is further submitted that even C/SCA/16765/2017 JUDGMENT otherwise the said decision cannot be said to be a decision of the respondent No.2 GMSCL and t h e s a m e c a n b e s a i d t o b e t h e decision of the Finance Department of Government of Gujarat.
[ 5 . 3 ] I t i s f ur t h e r s u bmi t ted th a t e v en o t he r w i s e t h e impu g n e d decision dated 23.08.2017 is absolutely illegal, unreasonable and arbitrary. It is submitted that
a d m i t t e d l y w h e n t h e c o n t r a c t w a s e xe c u t ed , t her e was no en a ctme n t or s t a t ut e li k e C G S T / G S T a n d pri o r t o introduction of CGST / GST , the taxes were being borne by
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t h e G o v e r n m e n t . I t i s s u bm i tted that therefo r e on introd u ction o f CGST / GST, obligation is always cast upon the Government to pay any tax inclusive of the G S T . I t i s s u b m i t t e d t h a t t h e r e f o r e t h e impugned decisions of CGST in not granting the benefit of change in tax structure, by revising the rate contract, deserves to be quashed and set aside.
[ 5 . 4 ] It i s f u r t h e r s u b m i t t e d b y S h r i N a n a v a t i , learned Counsel appearing on behalf of the petitioners that as such at the time when the rates were offered, w h i c h w e r e a c c e p t e d a t t h e t i m e o f a w arding the contract for supply of goods in question , no one had kept in mi n d the GST / rate s 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 C/SCA/16765/2017 JUDGMENT that Clause 49 of the tender document specifically provide
tha t c l aim of price revision of finished goods under any pretext or reas o n , in c lu d ing t h e re v ision of duty / excise / cost will not be allowed at any stage a fter the last date of submission of the tender . It is submitted that same shall be applicable to GMSCL also.
[5.6] It is further submitted by Shri Nanavati, learned Counsel appearing on behalf of t h e p e t i t i o n e r s t h a t e v e n o t h e r w i s e t h e impugned decisions can be said to be and/or amounts to novation in the contract which may be on change of circumstances more particularly on applicability of CGST / GST.
Making above submissions and relying upon decisions of the Hon’ble Supreme Court in the case of Zonal Manager, Central Bank of India vs. Devi Ispat Limited and Others reported in (2010) 11 SCC 186 (Para 28); ABL International Ltd. and Another vs. Export Credit Guarantee Corporation of India Ltd. and Others reported in (2004) 3 SCC 553 (Paras 23, 53), it is requested to exercise the powers under Article 226 of the Constitution of India and quash and set aside the impugned decisions.
[ 6 . 0 ] P r e s ent S p e ci a l C i v il A p p l i c a t i o n s a r e v e h e m ent l y o p p o se d b y Shri Kamal Trivedi, learned Advocate General appearing on behalf of the State. Shri Trivedi, l e a r n e d A d v o c a t e G e n e r a l h a s h e a v i l y r el i e d u po n C l au s es 13 ( b ) and Cla u se 49 of the T e n der D ocumen t s and Clause 26 and Clause 43 of the Rate Contracts. Relying upon the aforesaid clauses it is s u b m i t t e d t h a t t h e r a t e s o f f e r e d a n d accepted were the net price inclusive of all duties and sundries. It is submitted that as per
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Clause 49 of the Tender Documents, the claim of price revision of finished goods under any pretext or reason including of revision of duty / excise / cost will not be C/SCA/16765/2017 JUDGMENT allowed at any stage after the last date of submission of the tenders. It is submitted that therefore there is no clause for variation in case of
r e v i s i o n o f a n y t a x . I t i s s u b m i t t e d t h a t therefore the rate quoted by the petitioners were inclusive of VAT, excise duty etc. applicable at
r e l e v a n t t i m e . I t i s s u b m i t t e d t h a t instead of now VAT, CGST / GST at 12% has been introduced. It is submitted that the rate at w h i c h t h e g o o d s w e r e t o b e s u p p l i e d would r emain t h e s am e i . e . i n the p r esent c ase 49 . 5 0 per u n it . It i s s u bmitted that theref o re as s uch t here is no question of pe r mitt i ng the petitioners to change the rate or permit the price revision of the finished goods in view of the aforesaid changed circumstances . It is submitted that even otherwise as per the position prevailing earlier, to pay the taxes including the VAT / excise duty was upon the supplier. It is submitted that in one case VAT applicable 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.
Ma k in g above sub m i s s i ons and relying upon the decisions of t h e H o n ‘ b l e S uprem e C ou r t in the c ase of Rashtriy a 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 Gene r a l ap p e a r i n g on beh a lf of the State has also requested to dismiss the present petitions and not to exercise powers u n d e r A r t i c l e 2 2 6 o f t h e C o nst i tut i o n o f C / S C A / 167 6 5 / 201 7 J U DGME N T India in view of the specific arbitration clause in the contract in case of any dispute between t h e p a r t i e s b y r e l y i n g u p o n t h e d e cision s o f t h e H o n ‘ b l e S u p r e m e C o u r t i n t h e c a s e o f S t a t e o f U . P . and O t h e r s vs . B r i d g e & R o o f C o m p a n y ( I n dia ) Ltd . repor t e d i n ( 1 996 ) 6 SC C 2 2 ( P ar a s 15 , 1 6 a n d 2 1 ) ; K eral a S ta t e Ele c t ric i ty Board and Another vs. Kurien E. Kalathil and Others reported in (2000) 6 SCC 293 (Para 10 and 11) and Joshi Technologies International Inc. vs. Union of India and Others reported in (2015) 7 SCC 728 (Paras 70 to 72).
[7.0] Present Special Civil Applications are opposed by Shri Mitul Shelat, learned Advocate appearing on behalf of the respondent No.2 GMSCL also.
An affidavit in reply is filed on behalf of the respondent GMSCL.
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[ 7 . 1 ] I t i s v e h e m e n t l y s u b m i t t e d b y S h r i S h e l a t , l e a r n e d A d v o c a t e a p p ea r i n g o n b e h a l f o f t h e r e s p o n de n t N o . 2 that t he d i spu t e r a ised in t h e p re s e n t p e t i t i o n s is ar i s i n g o u t o f the c o n t ra c t b e t w e e n t h e p a rtie s w h i c h are in the realm of private law and therefore, any dispute relating to the interpretations of the terms of such a contract cannot be permitted to be agitated in a writ petition under Article 226 of the Constitution of India.
[ 7 . 2 ] It i s fu r th e r s u b m itted b y S h ri Shelat , lear n e d Ad v o c ate appearing on behalf of the respondent No.2 that even the prayer sought in the writ petition is contrary to the express terms and conditions of the contract executed between the parties. It is submitted that the writ petitions are seeking alteration in the terms and conditions of a contract which is not maintainable in law. It is further submitted that under the terms o f the contract , any C / SCA / 16765 / 2017 JUDGMENT qu e stion , dis p ute o r difference arising u n der the con d itions o f the contract or in connection with the contract are to be referred to arbitration in accordance with Clause 33 of the Contract. It is submitted that even otherwise on merits also the petitions deserve to be dismissed. It is submitted that in the present case the writ petitioners have executed the agreement with the GMSCL for supply of the tendered products on rate contract basis.
It is submitted that in terms of the contract the price quoted by the petitio n ers an d a ccepted by the G M S CL is th e final p r i c e in c lus i ve of all levies and taxes and the petitioners are not entitled to any escalation and/or price revision on any counts including on the count of levy of new tax / revision of tax etc.
[7.3] It is submitted that on the introduction of the GST, the respondent No.2 has a l s o r e c e i v e d t h e r e p r e s e n t a t i o n s f r o m t h e pet i tioners and other sup p li e rs seeking r e vi s io n o f p r i ce o f t h e r a t e contract to give effect to the levy of GST. It is submitted that in accordance with the terms of t h e c o n t r a c t , a s t h e r e w a s n o provision for variation of price on account of increase or additional levy of any tax, the Board o f G M S C L a f t e r d u e c o n s i d e r a t i o n o f 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 a f t er due co n s i d e r a t i o n s o f t h e t e rms o f t h e c o n t r act o p in e d t h a t as ther e w as n o p r ovisi o n w h ich e n t i tle d t h e va r i a t i o n of pr i ce as s o ugh t f or , t h e G M SCL to t ak e s t e p s in a ccord a nce wit h the ter m s o f t h e c o n t r a c t . It i s s u b m i t ted t hat t here a f ter opi n ion o f t h e F i n ance De p artm e nt came to be considered by the Board of Directors of the Corporation in its 22nd Meeting held o n 2 3 . 0 8 . 2 0 1 7 . I t i s s u b m i t t e d t h a t t h e Board of Directors consisting of Additional Chief Secretary (Medical Services and Medical Education Health and Family Welfare C/SCA/16765/2017 JUDGMENT Department) as C h a i r m a n a n d o t h e r m e m b e r s a f t e r d u e conside r a t ion o f t h e f ile r e s olved th a t th e r e presenta t i o n m a de i s c o n trary to t h e t e rm s o f t he co n t r a c t a n d c o u l d n o t b e a c c e d e d t o an d c a l l u p o n t h e v e n d o r s t o g i v e c o n f i r m a t i o n r e g a r d i n g s u p p l y a t
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t h e c o n t r a ct e d p r i ce a n d i n t h e e v e n t o f t h e i r f a i l u r e t o t a k e f u r t h e r s t e p s i n a c c o r d a n c e w i t h t e r m s o f t h e c o n t r a c t . R e l y i n g u p o n C l a u s e 10, 13(b), 16, 49 of the Tender Documents and Clause 26 of the Rate Contract, it is submitted that so far as fixation of price is concerned, there is no provision for variation on account of increase in any levy or duty. It is submitted that price / rates quoted by the suppliers were inclusive of all taxes and levies. It is submitted that therefore the p e t i t i o n e r s a r e o b l i g e d u n d e r t h e contract to supply the product at the contracted price and there is no question of revision of the contract rate by adding the component of GST.
[7.4] It is further submitted by Shri Shelat, learned Advocate appearing on behalf of the respondent No.2 that as such the illustration that after the representations the illustrations mentioned in the impugned communication dated 31.08.2017 has been withdrawn a n d s t a n d s d e l e t e d a n d n o w t h e p e t i t i o n e r s – suppliers are required to supply the goods at the contracted rate.
[ 7 . 5 ] I t i s f u r t h e r s u b m i t t e d b y S h r i S h e l a t , l e a r n e d A d v o c a t e a p p e a r i n g o n b e h a l f o f r e s p o n d e n t N o . 2 t h a t a s s u c h t h e d e c i s i o n o f th e B o a r d o f D i r e c t o r s i n i t s m e e t i n g h e l d o n 2 3 . 0 8 . 2 0 1 7 i s a s s u c h t h e d e c i s i o n o f t h e B o a r d o f D i r e c t o r s a f t e r c o n s i d e r i n g t h e o p i n i o n o f t h e F i n a n c e D e p a r t m e nt w h i c h w a s s o u g h t . I t i s s u b m i t t e d t h a t all the members of the Board of Directors have taken a conscious decision as recorded in the Minutes of Meeting of the Board of Directors dated 23.08.2017.
C/SCA/16765/2017 JUDGMENT [7.6] It is further submitted by Shri Shelat, learned A d v o c a t e a p p e a r i n g o n b e h a l f o f t h e r e s p o n d e n t N o . 2 t h a t e v e n e a r l i e r a l s o t h e l i a b i l i t y t o p a y t h e V A T a n d t h e e x c i s e d u t y a n d o t h e r l e v i e s w a s upon the supplier. It is submitted that now VAT and excise duties have been abolished and the s a m e h a v e b e e n s u b s t i t u t e d b y introduction of GST / CGST and the liability to pay the same also would be upon the petitioners
– s u p p l i e r s a s p e r t h e r e l e v a n t p r o vision s of the c o n t ra c t a s w e l l a s a s p e r t h e stat u t or y pro v i sio n s . It i s submitt e d that assu m ing that V AT / excis e dut y w ou l d h a v e b e en conti n ue d a n d th e GS T woul d n o t have b e en i n tro d uced a n d the r a t e of V AT an d exci s e dut y h av e b e en i n c reas e d w h i c h m ight be mat c hi n g w it h a pplic a b i l i t y of t h e rat e of G ST , in tha t c a s e t h e petiti o n ers sha l l not b e enti t led t o a ny p r ice r evi s i o n in v i e w o f t he afore s a i d s p ec i f i c c l a u s e s , t h at n o p ric e r e v i s i o n shall be permiss i ble on any ground. It is submitted that therefore the petitioners cannot be permitted to revise the r a t e s a n d i f s u c h p r a y e r i s g r a n t e d i t wou l d t a n tamou n t t o c h a n g e i n t e r m s a n d c o n d i t i o n s o f t h e t e n d e r d o c u m e n t s / r a t e c o n t r a c t s , w h i c h i s n o t p e r m i s s i b l e i n e x e r c i s e o f powers under Article 226 of the Constitution of India.
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M a k i n g a b o v e s u b m i s s i o n s a n d r e l y in g u p o n a b o v e d e c i s i ons , it is requested to dismiss the present petitions.
[ 8 . 0 ] N o w , s o f a r a s t h e S p e c i a l C i v i l A p p l i c a t i o n N o . 1 7 9 9 1 / 2 0 1 7 i s concerned, Ms. Minu Shah, learned Advocate appearing on behalf of the petitioners has a d o p t e d t h e s u b m i s s i o n s m a d e b y S h r i 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
1 6 7 7 3 / 2 0 1 7 t h e l i a b i l i t y w a s C / S C A / 1 6 7 6 5 / 2 0 1 7 J U D G M E N T 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 that sum and substance of the prayer of the petitioners is that they may be permitted to revise the price in view of the change
in the tax structure by introducing the GST.
[9.1] It is the case on behalf of the petitioners that at the relevant time when they submitted the b i d s a n d q u o t e d t h e r a t e s w h i c h
ca m e t o b e a c c e p t e d , t h e G S T / C G S T w a s n o t i n e x i s t e n c e w h i c h c a m e t o b e i n t r o d u c e d s u b s e q u e n t l y a n d t h e r e f o r e , i n v i e w o f t h e above, they may be permitted to change the rates. Therefore, the short question which is posed
f o r c o n s i d e r a t i o n o f t h i s C o u r t i s whether the respondents are required to be directed to accept the request of the petitioner of price revision in view of the introduction of the GST?
[ 9 . 2 ] W h i l e c o n s i d e r i n g t h e a f o r e s a i d m a i n i s s u e t h e r e l e v a n t c l a u s e s of t h e t e n d e r d o c u m e n t s a n d t h e r a t e c o n t r a c t s a r e r e q u i r e d to be considered which are as under:
“RELEVANT CLAUSES OF THE TENDER DOCUMENTS Clause 13(b) The rates quoted should be F.O.R.
destination anywhere in Gujarat basis irrespective of value of order and inclusive of all charges such as packing, delivery, insurance, inspection, etc. per unit of packing as s h o w n i n t h e e nq u i r y d o c u m e n t . T h e r a t e s s h o w n a g a i n s t the item shall b e p r e sume d , in a l l c ases , a s t he n e t pric e inclusive of all duties and sundries. No payment against C/SCA/16765/2017 JUDGMENT any duties / delivery charges etc. will be considered under any separate heading under any circumstances. Octroi exemption certificate / Commercial Tax “D” form for, as applicable will b e p r o v i d e d b y t h e p u r c h a s e r , o n s u c h request from the tenderer, after order has been placed by the concerned authorities. Tenderer
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will also have to guarantee for regular and timely supply of all the items.
Cl a u s e 4 9 T h e c l a i m o f p r i c e r e v i s i o n o f f i n i s h e d g o o ds un d er a n y p r e t e xt o r r e a s o n , i n c l u d i n g t h e r e v i s i o n o f d u t y / excise / cost will not be allowed at any stage after the last date of submission of the tenders.
R E L E V A N T C L A U S E S O F R A T E C O N T R A C T C l a u s e 2 6 T h e c l a i m o f p r i c e r e v i s i o n o f f i n i s h e d g o o d s u n d e r a n y p r e t e x t o r r e a s o n , i n c l u d i n g t h e r e v i s i o n o f d u t y / e x c i s e / r a w m a t e r i a l p r i c e o r a n y o t h e r c o s t w i l l n o t b e allowed at any stage after the last date of submission of the tenders.
C l a u s e 4 3 T h e a bo v e p r i c e s a r e i n c l u s i v e o f e x c i s e d u t y a t the rate prevailing on the date of your quotations. If the rate of Excise Duty has since then d e c r ea s e d , y o u s h a l l c h a r g e E x c i s e D u t y a t t h e r a t e p r e v a i l i n g a t t h e t i m e o f s u pp l y a n d d e c r e a s e t h e p r i c e p r o p o r t i o n a l l y a n d i n f o r m 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 / r a t e s s h o w n C / S C A / 1 6 7 6 5 / 2 0 1 7 J U D G M E N T a g a i n s t t h e i t e m i n a l l c a s e s , s h a l l b e u n d e r t h e n e t p r i c e s i n c l u s i v e of all duties and sundries. As per Clause 13(b) even no payment against any duties / delivery c h a r g e s e t c . s h a l l b e c o n s i d e r e d i n se p a r a te h e a d i n g u n d e r a n y c i r c u m s ta n c e s . A s p e r C l a u s e 4 9 o f t h e tender document the claim of price revision of any finished goods under any pretext or reason, i n c l u d i n g t h e r e v i s i o n o f d u t y / 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 is not permissible as per the ter m s and c o nd i tions o f t h e t e n d e r d o c u m e n t / r a t e c ont r a ct s . A t the c o st o f r e peti t ion it i s obs e r v ed that as such the price quoted as per the rate contract and accepted by the petitioner
– suppliers was inclusive of all duty, levies such as VAT, excise duty etc. and there shall not be a n y d e v i a t i o n p e r m i s s i b l e o n a n y g r o u n d . T h e r e f o r e , m e r e l y b e c a u s e t h e V A T / e x c i s e d u t y h a s b e e n a b o l i s he d ,
w hich was t h er e a t the r e le v a nt tim e when th e p rices were quoted and the rate contracts were executed and thereafter has been substituted by the GST, the petitioners cannot be permitted to change the rate contract / rates and cannot be permitted to have the price revision. Otherwise the same shall be contrary to the t e r m s a n d c o n d i t i o n s o f t h e r e l e v a n t t e n d e r
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d oc u men t s / r a t e c o n t r a c ts . I t i s r e q u i r e d t o b e n o t e d t h a t a s s u ch s o fa r a s the pe t i t i o n e r s a r e c o n c e r n e d , t h e y w i l l h a v e t o p a y t o t h e G o v ern m e n t t h e s a m e p r i ce w h i c h wa s q u o t e d b y t h e m a n d a s p e r the rate contracts, which otherwise they agreed to charge.
[9.4] The aforesaid issue is required to be considered from another C/SCA/16765/2017 J U D G M E N T a n g l e a l s o . A s o b s e r v e d h e r e i n a b o v e , e a r l i e r a n d p r e −i n t r o d u c t i o n o f GST / CGST and as per the rate contracts, the liability to pay the taxes including the VAT and the excise duty was upon the suppliers. That at the relevant time VAT liability was 5% and the exc i s e d u t y l i a b i l i t y wa s 2 % . A s p e r t h e G S T , n o w t h e t o t a l t a x l i a b i l i t y w o u l d be 1 2 % . F or e x a mp l e , i f t h e G S T w o u l d n o t h a v e b e e n i n t r o d u c e d a n d i n s t e a d t h e V A T a n d e x c i s e du t y w o u l d h a v e been continued to be levied and the rate of VAT and excise duty have been increased and take an example that the same is increased to 12%, in that case, as per the original terms and conditions of the tender document / rate contracts the liability to pay the revised /
e n h a n c e d r a t e o f t a x w a s a l w a y s u p o n t h e s u p p l i er an d a s p e r C l a u s e 4 9 o f t h e t e n d e r d o c u m e n t t h e c l a i m o f p r i c e
r e v i s i o n o f a n y f i n i s h e d g o o d s u n d e r a ny p r e t e x t o r r e a s o n including the revision of duty / excise / cost will not be allowed at any stage after the last date o f s u b m i s s i o n o f t h e t e n d e r s . T h e r e f o r e , me r e l y b e c a u s e no w t h e V A T a n d e x c i s e d u t y h a v e be e n deleted and instead the same is substituted by GST which may be at 12%, the petitioners cannot
claim the price revision on the aforesaid ground. As observed hereinabove, otherwise also the liability to pay VAT / excise duty etc. was upon the suppliers. T h ere f ore , th e g r ant o f any reli e f a s pr a ye d i n th e p r esent pe t it i o n s would tantamount to varying terms and conditions of the tender document / rate contracts w h i c h i n e x e r c i s e o f p o w e r s u n d e r Article 226 of the Constitution of India shall not be permissible.
[ 1 0 . 0 ] A t t h i s s t a g e f e w d e c isio n s o f th e H o n ‘ bl e Supreme Court relied u p o n b y th e lea r ned Cou n s e l a ppea r i ng o n b e h a l f o f the State are required to be referred to.
[10.1] In the case of Afcons Infrastructure Limited (Supra), the
C/SCA/16765/2017
JUDG
- on’ble Supreme Court in paras 11 to 16 have observed and held as under:
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” 1 1 . R e c e n t l y , i n C e n t r a l C o a l f i e l d s L t d . v . S L L −S M L ( J o i n t
V en t u r e C o n s o r t i u m ) 5 i t w as held b y t h i s C o u r t , r e l y i n g o n a h o s t o f
d e c i s i o n s t h a t t h e d e c i s i o n −m a k i n g p r o c e s s o f t h e e m p l o y e r o r o w n e r
of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decision −making process is mala fide or is intended to favour someone. Similarly, the d e c i s i o n s h o u l d n o t b e i n t e r f e r e d w i t h u n l e s s t h e d e c i s i o n i s s o a r b i t r a r y o r i r r a t i o n a l t h a t t h e C o u r t co u l d sa y t h a t t h e d e c i s i o n i s o n e w h i c h n o r e s p o n s i b l e a u t h o r i t y a c t i ng reasonably and in accordance with law could have reached. In other words, the de c i s i o n m a k i n g p r o ces s o r t h e d e c i s i o n s h o u l d b e p e r v ers e a n d n o t m e r e l y fa u lty o r i n c o r r e c t o r e r r o n e o us . N o s u c h extreme case was made out by GYT−TPL JV in the High Court or before us.
12. In Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay6
i t w as h e l d t h a t t h e c o n s ti t u t i o n a l C o u r t s a r e
concerned with the decision making process. Tata Cellular v. Union of India7
w e nt a s t e p f ur t h e r and h e l d t h a t a d ec i s io n i f c h a l l e n g e d
(the decision having been arrived at through a valid process), the constitutional
C o u r t s c a n i n t e r f e r e i f t h e d e c i si o n i s p e r v e r s e .
However, the constitutional Courts are expected to exercise restraint in interfering
wi t h t he a dm i n i s t r a t i v e d ec i si o n a n d o u g h t n o t to substitute its view for that of the administrative authority. This was confirmed in Jagdish Mandal v. State of Orissa8 as mentioned in Central Coalfields5.
1 3 . I n o t h e r w o r d s , a m e r e d i s a g r e e m e n t w i t h t h e de c i s i o n
m a k i ng p r oc e ss or the deci s io n o f t h e adm i n i strat i v e autho r i t y is n o
reason f o r a const i t u t i on a l C ourt to inte r fer e . T he t hres h old o f m a l a
fides, intention to favour someone or arbitrariness, irrationality or perversity must
b e m et befo r e th e c o n st i t ut i o nal Cou r t i n t e rfe r e s
with the decision making process or the decision.
14. We must reiterate the words of caution that this Court has stated right from
t h e t i m e w h e n R a m an a D a y a r a m S h e t t y v . International Airport Authority of India[6] was decided almost 40 years ago, namely, that the words used in the tender documents cannot be ignored or treated as redundant or superfluous – they must be given meaning and
t h e i r n e c e s s a r y s i g n i f i c a n c e . I n t h i s context, the use of the word “metro” in Clause 4.2(a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked.
C/SCA/16765/2017 JUDGMENT
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- We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that t h e o w n e r o r e m p l o y e r o f a p r o j e c t ma y g i v e a n i n te r p r e t a t i o n to t he t e n d e r d o c u me n t s t h a t i s n o t a c c e p t a b l e t o th e con s t i t u t i o n a l C o u r t s b u t t h a t by i t s e l f i s n o t a r e a s o n f o r i n t e r f e r i n g with the interpretation given.
- I n t h e p r e s e n t a p p e a l s , a l t h o u g h t h ere d o e s n o t a p p e a r t o
b e a n y a m b i g u i t y o r d o u b t a b o u t t h e i n t e r p r e t a t i o n g i v e n b y N M R C L
t o t h e t e nde r c o n d i t i o n s , we a r e o f t h e v i e w t h a t e v e n i f t h e r e w a s
such an ambiguity or doubt, the High Court ought to have refrained from giving its
own i n te r p r e t a t i o n u n l e s s it h a d c o m e t o a c l e a r
conclusion that the interpretation given by NMRCL was perverse or mala fide or
i n t e n d e d t o f a v o u r o n e o f t h e b i d d e rs . Thi s w a s certainly not the case either before the High Court or before this Court.”
[ 1 0 . 2 ] A t t h i s s t a g e t h e d e c i s i o n o f t he H o n ‘ b l e S u p r e m e C o u r t in the case of Rashtriya Ispat Nigam Ltd. (Supra) is also required to be referred to and c o n s i d e r e d . I n t h e c a s e b e f o r e t h e H o n ‘ b l e S upr e m e C o u r t t h e q u e s t i o n was w h e t h e r u n der t h e r e l e v a n t c l a u s e 9 . 3 o f t h e t e r m s a n d c o n d i t i o n s o f t h e c o n t r a c t b e t w e e n t h e p a r t i e s , a n e m p l oye r – R a s h t r i y a I sp a t N i g a m L t d . w a s r i ght i n dedu c ti n g t h e service ta x f r om t h e b ills o f the r espon d ent – c o n t r a c tor ? The relevant clause 9.3 in the said case was as under:
” 9 . 3 . T he co n tr a c t or sha l l bear a n d pay a l l t a x e s , d u t i e s a n d
other lia b i l i t i e s in c o nn e c t i o n w it h dis c ha r g e o f his o b l i g a ti o n s
u n d e r t h i s order . A n y i n c o m e t ax o r a n y o t h e r t a x e s or du t i e s
which the company may be required by law to deduct shall be deducted at source
and t h e s a m e s h a l l b e p a i d t o the t a x authorities for the account of the contractor and the company shall provide the contractor with required tax deduction certificate.”
The learned Arbitrator relying upon Clause 9.3 held that the C/SCA/16765/2017 JUDGMENT l i ab i li t y to p a y t he s e r v i c e t ax would b e upon t he co n t r a cto r an d t he empl o yer righ t l y d e d u ct e d th e s am e f r om the bi l ls of th e cla i m a nt / c ontractor. On an a p pea l the H i gh C o urt set a s i de t h e a w ard p assed by the learned Arbitrator by observing that the purpose of Clause 9.3 is not to shift the burden o f t a x e s f r o m t h e a s s e s s e e w h o i s liable under the law to pay the taxes to a person who is not liable to pay taxes under the law.
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T h e D i v i s i o n B e n c h c o n f i r m e d t h e judgment of the learned Single Judge. On an appeal the Hon’ble Supreme Court quashed and set aside the judgment and order passed by the learned Single Judge confirmed by the Division Bench by observing in paras 39, 40 and 42 as under:
” 3 9 . T h e p r o v i s i o n s c o n c e r n i n g s e r v i c e t a x a r e r e l e v a n t
on l y a s b e t w e en t h e a p p e l l a n t a s a n a s s e s s e e u n d e r t h e s t a t u t e
a n d th e t a x a u t h o r i t i e s . T h i s s t a t u t o r y p r o v i s i o n c a n b e o f n o
relevance to determine the rights and liabilities between the appellant and the
r e s p o n d e n t a s a g r e e d i n t h e c o n t r a c t
b e t w e e n t w o o f t h e m . T h e r e w a s n o t h i n g i n l a w t o p r e v e n t t h e
a p p e l l a n t f r o m e n t e r i n g i n t o a n a g r e e m e n t w i t h t h e r e s p o n d e n t handling contractor that the burden of any tax arising out of obligations of the respondent under the contract would be borne by the respondent.
40. If this clause was to be read as meaning that the respondent would be
l i a b l e o n l y t o h o n o u r h i s o w n t a x
liabilities, and not the liabilities arising out of the obligations under the contract,
t h e r e w a s n o n e e d t o m a k e s u c h a
p r o v i s i o n i n a b i l a t e r a l c o m m e r c i a l d o c u m e n t e x e c u t e d b y t h e parties, since the respondent would be otherwise also liable for the same.
42. It was pointed out on behalf of the appellant that it is conventional and accepted commercial practice to shift such liability to the contractor. A similar clause was considered by this Court in the case of Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd.9 In that matter, the question was as to whether the contractor was liable to pay and bear the c o u n t e r v a i l i n g d u t y o n t h e i m p o r t s t h o u g h t h i s d u t y c a m e i n t o f o r c e s u b s e q u e n t t o t h e r e l e v a n t c o n t r a c t . T h e r e l e v a n t c l a u s e 2 ( b ) r e a d a s f o l l o w s : ( S C C p . 4 7 9 , p a r a 1 6 ) C / S C A / 1 6 7 6 5 / 2 0 1 7 J U D G M E N T ” 1 6 . … ‘2. (b). All taxes and duties in respect of job mentioned in the aforesaid contracts shall be the entire responsibility of the contractor…’ “
R e a d ing this clau s e and t h e c o n n ect e d do c um e nt s , t h i s C o u rt held that they leave no manner of doubt that all the taxes and levies shall be borne by the contractor including this countervailing duty.”
[ 1 0 . 3 ] I n t h e p r e s e n t c a s e as o b se r ve d her e inab o v e a s s u c h th e liab i l i t y to p a y GS T unde r t h e G S T / CGS T A c t i s u p o n t h e s u p p l i e r . As obs e r v e d h e re i n a bo v e the p r i c e q u o t e d a nd th e r a t e c o n t r ac t w a s inc l usi v e o f a l l th e l e vie s and t a xe s . Ther e f ore , t he p etiti o n e rs s h a l l 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
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rates quoted and have considered the change in tax structure and have granted the benefit by r e v i s i n g t h e r a t e c o n t r a c t s b y t h e suppliers is concerned, it is required to be noted that as such the relevant rate contracts / t e n d e r d o c u m e n t s i n t h e c a s e o f t h e a f o r e s a i d C o r p o r at i o n s ar e n o t b e f o r e t h e C o u r t . T he r e f o r e , w h a t weighed with the said Corporations is not before the Court. Even otherwise merely because some other medical services Corporations might have taken a different view, cannot be a gr o u n d t o s e t a s i d e t h e i m p u g n e d d e c i s i o n s w h i c h o t h e r w i s e i s f o u n d t o b e j u s t a n d p r o p e r . I n t h e p r e s e n t c a s e t h e d e c i s i o n t a k e n by the respondent No.2 GMSCL in not permitting the price revision is after due application of mind and even after considering the opinion of the Finance Department, State of Gujarat and a conscious decision has been taken by the Committee which is neither perverse nor arbitrary and/or contrary to the terms and C/SCA/16765/2017 JUDGMENT conditions of the tender documents / rate contracts. Therefore also, the impugned decision not s u f f e r i n g f r o m a n y m a l a f i d e s a n d / o r a r b i t r a r i n e s s , t h e s a m e i s n o t r e q u i r e d t o b e q u a s h e d a n d s e t a s i d e in exercise of powers under Article 226 of the Constitution of India.
[11.1] Now, so far as the submission on behalf of the petitioners that the impugned decision contained in the meeting held on 31.08.2017 not permitting the price revision is not a decision of the Committee and according to the petitioners the same is the decision of Finance Department is concerned, the same has no substance. It is r e q u i r e d t o b e n o t e d t h a t t h e B o a r d o f Directors thought it fit to consult the Finance Department having financial implications and thereafter the Finance Department opined that considering the terms and conditions of the tender documents / rate contracts price revision is not permissible, thereafter a co n s c i o u s d e c i s i o n h a s b e e n t a k e n b y t h e B o a r d o f D i r e c t o r s i n i t s m e e t i n g d a t e d 2 3 . 0 8 . 2 0 1 7 . T h e r e f o r e , t h e a f o r e s a i d s u b m i s s i o n o n b e h a l f o f t h e p e t i t i o n e r s t h a t t h e s a i d d e c i s i o n i s n o t of Board of Directors has no substance.
[ 1 1 . 2 ] N o w , so f a r a s the reliance p l a c e d u p on the decisio n o f the Hon’ble Supreme Court in the case of ABL International Ltd. (Supra) and Devi Ispat L i m i t e d ( S u p r a ) b y t h e l e a r n e d C o u n s e l a p pear i n g o n b eha l f o f t h e p e t i tione r i s c o n cerne d , t h e r e c a n n o t be a n y di s p u t e w i t h res p e c t t o th e p r o p o si t i o n o f l a w l a id d o w n b y t h e H o n ‘ b l e Sup r e m e C o u r t i n t h e afor e sa i d d eci s io n s . Ho w e v e r , w e ar e o f t he o p i nion t h a t t h e s a id de c i sion s h a l l no t b e ap p l i c ab l e to t h e facts of the case on hand. In the present case it cannot be said that either the State and/or the respondent No.2 have acted unfairly and/or unjustly and/or unreasonably and/or the decision of the State / respondent No.2 is contrary to the public good and/or the C/SCA/16765/2017 JUDGMENT public interest. Under the circumstances, the aforesaid decisions shall not be applicable to the facts of the case on hand.
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[ 1 1 . 3 ] N o w , s o f a r a s t h e s u b m i s s i o n o n b e h a l f o f t h e r es p o n d e n t s t h a t i n v i e w o f t h e a r b i t r a t i o n c l a u s e c o n t a i n e d i n t h e a g r e e m e n t / r a t e c o n t r a c t s , f o r a n y d i s p u t e t h e p e t i t i o n e r s h a v e t o av a i l t h e r e m e d y o f a r b i t r a t i o n i s c o n c e r n e d , a s t h e l e a r n e d C o u n s e l a p p e a r i n g f o r r e s p e c t i v e p a r t i e s h a v e m a d e e l a b o r a t e s u b m i s s i o n s o n m e r i t s a n d i s s u e s i n v ol v e d a r e i m p o r t a n t i s s u e s a n d a s o b s e r v e d h e r e i n a bo v e the learned Counsel appearing for respective parties have made elaborate submissions on merits, we have considered the present petitions on merits, keeping the said question open.
[ 1 2 . 0 ] I n v i e w o f t h e a b o v e a n d f o r t h e r e a s o n s s t a t e d a b o v e , all these Special Civil Applications fail and the same deserve to be dismissed and are, accordingly, dismissed. Rule is discharged in each of the petitions.
Sd/− (M.R. SHAH, J) Sd/− (A.Y. KOGJE, J) Ajay**
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