Facts of the Case

The petitioner, M/s Manogna Enterprises, a partnership firm, filed a writ petition before the High Court for the State of Telangana at Hyderabad challenging two Short Tender Notices (Tender ID Nos. 485777 and 485778, both dated 21.12.2023) issued by Nizamabad Municipal Corporation for engaging drivers on an outsourcing basis for garbage lifting and disposal for a 12-month period from 01.01.2024. The petitioner's grievance was that the tender documents did not expressly include a GST component in the quoted price, and that the third respondent had not obtained an advance ruling under Sections 97(2) and 100(1) of the Central Goods and Services Tax Act, 2017 before floating the tender. The petitioner sought a mandamus directing inclusion of the GST component or, alternatively, obtaining of an advance ruling, and also sought interim orders restraining the respondents from proceeding with the tender process. Supply of manpower services being a taxable outward supply, the petitioner's underlying concern was that a successful bidder providing drivers for garbage-lifting operations could end up absorbing GST out of its own margins if the consideration quoted in the tender was not clearly structured to account for the tax component, potentially rendering the contract commercially unviable for the service provider. The writ petition, along with an interlocutory application under Section 151 CPC seeking a stay of the tender process, was taken up for hearing and final disposal at the admission stage itself, with the consent of counsel for all parties.

Issues Involved

  1. Whether the tender documents issued by the Municipal Corporation failed to include the GST component payable on the manpower supply consideration.
  2. Whether the third respondent was obligated to obtain an advance ruling under Sections 97(2) and 100(1) of the CGST Act, 2017 before finalising the tender.

Petitioner's Arguments

  • The tender document for supply of manpower services (drivers) did not include the GST component payable on the consideration, even though such supply is taxable under the CGST Act, 2017.
  • In the absence of inclusion of GST or an advance ruling under Sections 97(2) and 100(1) of the CGST Act, the tender process was illegal and arbitrary.

Respondent's Arguments

  • The tenderers were required to quote an all-inclusive price, and the claim that the GST component was excluded from the tender was factually incorrect.
  • Clause 11 of the tender document's 'Note' expressly stated that the total monthly rates quoted shall be inclusive of profits, overheads, bonus, gratuity and taxes whatsoever payable, which necessarily covers GST.

Court Order/Findings

  • The Court examined Clause 11 of the tender terms and found that although sub-clause (a) referred specifically to weekly-off arrangements for security guards, the omission to separately number the succeeding portion did not confine its application only to security guards.
  • The Court held that the tender condition on inclusive pricing covered both direct and indirect taxes payable by the successful tenderer, including GST, on the manpower services contemplated by the impugned tenders.
  • Since the petitioner's premise that GST was excluded from the tender price was found to be contrary to the actual tender conditions, no case for interference was made out.
  • The writ petition was dismissed as devoid of merit, without costs, and connected miscellaneous petitions were closed.
  • The Court did not go into the alternative prayer for an advance ruling under Sections 97(2) and 100(1) of the CGST Act, since that relief was contingent on the primary premise of GST exclusion, which itself was found unsubstantiated.

Important Clarification

A tender clause requiring quoted rates to be 'inclusive of all taxes whatsoever payable' is read as already factoring in GST liability, even without an express separate GST line-item, and does not by itself necessitate an advance ruling under Sections 97 and 100 of the CGST Act.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — Section 97(2) (questions on which advance ruling may be sought).
  • Central Goods and Services Tax Act, 2017 — Section 100(1) (appeal against advance ruling).

Decision – In Favour of

The decision favours the Department/tendering authority. The Court found the petitioner's factual premise incorrect, since the tender conditions already provided for inclusive pricing covering all taxes, and dismissed the writ petition on merits without costs.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: WRIT PETITION NO: 35027 OF 2023
  • CNR: Not available
  • Coram: The Honourable Sri Justice T. Vinod Kumar
  • Decision Date: 29.12.2023
  • Disposal Nature: Writ petition dismissed without costs

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