Facts of the Case

The petitioner, Innovative Group Conference and Event Solution Pvt. Ltd., participated in an e-tender floated by the respondents for setting up temporary "Mela" shops during the International Minjar Fair, 2022. The reserve price was fixed at Rs.1,27,81,200/-.

According to the petitioner, while entering the bid amount in the online tender portal, the system allegedly did not accept the basic bid amount of Rs.1,37,00,000/-. It was claimed that only after adding 18% GST did the portal generate the figure of Rs.1,61,74,260/-, which was accepted. Therefore, the petitioner contended that the bid amount of Rs.1,61,74,260/- was inclusive of GST and no further GST could be demanded by the authorities.

The respondents, however, maintained that the petitioner was liable to pay GST @18% over and above the quoted tender amount of Rs.1,61,74,260/-. 

Issues Involved

  1. Whether the tender amount of Rs.1,61,74,260/- was inclusive of GST.
  2. Whether the e-tender portal automatically added GST to the basic bid amount.
  3. Whether the respondents were legally justified in demanding 18% GST over and above the quoted tender amount. 

Petitioner's Arguments

  • The petitioner argued that the e-tender portal did not accept the basic bid amount unless GST was added.
  • It was submitted that after entering the bid amount, the system automatically generated the total amount of Rs.1,61,74,260/-, which already included GST.
  • Reliance was placed upon the bid schedule showing the same amount under both the basic bid column and the total amount with taxes, contending that the respondents could not demand GST again over and above the accepted bid amount.
  • The petitioner sought quashing of the demand requiring payment of GST in addition to the tender amount. 

Respondents' Arguments

  • The respondents denied that the tender portal automatically added GST.
  • It was contended that the quoted bid amount of Rs.1,61,74,260/- represented only the bid value and GST @18% was separately payable.
  • During the proceedings, the respondents produced the tender documents as well as the bid schedules of another successful participant to demonstrate that the portal merely reflected the amount entered by the bidder without any automatic GST calculation. 

Court Order / Findings

The Himachal Pradesh High Court dismissed the writ petition and upheld the respondents' demand for GST.

The Court observed that:

  • The tender document permitted the bidder to enter only the bidder's name and the basic bid amount.
  • The Court itself verified the functioning of the e-tender portal and found that when Rs.1,61,74,260/- was entered in the bid column, the same figure was automatically reflected in the total amount column without any addition of GST.
  • There was no automatic computation or addition of GST by the portal.
  • The petitioner's claim that the portal generated the amount after adding GST was factually incorrect.
  • The Court also relied upon the bid schedule of another bidder, The Prince Trading Company, where the same bid amount appeared identically in both relevant columns, proving that the portal merely replicated the entered figure.
  • Consequently, the Court held that the petitioner had voluntarily quoted Rs.1,61,74,260/- as the bid amount and was separately liable to pay GST @18% over and above the quoted amount.
  • Finding no illegality or arbitrariness in the demand, the Court dismissed the writ petition.

Important Clarification

  • Mere reflection of the same amount in the "Basic Rate" and "Total Amount with Taxes" columns does not establish that GST has already been included.
  • Courts may independently verify the functioning of an electronic tender portal where factual disputes arise.
  • A bidder cannot avoid statutory GST liability merely by alleging automatic generation of the bid amount unless supported by evidence.
  • GST remains payable separately where the tender conditions and portal functionality do not establish that the quoted amount is tax-inclusive.

Sections Involved

  • Goods and Services Tax (GST) provisions relating to levy of GST on government contracts and tenders.
  • Principles governing interpretation of tender conditions.
  • Article 226 of the Constitution of India (Writ Jurisdiction).

Link to download the order - https://www.mytaxexpert.co.in/uploads/1782894995_106compressed.pdf

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