Facts of the Case

Cherian Varkey Construction Company Pvt. Ltd. was the successful, lowest bidder for a tendered work under the Kerala State Coastal Area Development Corporation (KSCADC) and Harbour Engineering Department, entering into an agreement (Ext.P4) after its bid was accepted. Under Clause 3.3.3 of the tender document (Ext.P1), rates were to be quoted excluding GST, which was to be paid separately per prevailing government orders; the petitioner accordingly quoted rates 'without taxes'. When part bills were raised, respondents processed and sanctioned payment without admitting GST at applicable rates, despite a circular (Ext.P17) and a technical evaluation committee decision (Ext.P16) that appeared to support paying GST over and above the tendered value. The petitioner sought a declaration that Ext.P1/P2 terms governed the contract and a direction to pay GST on all bills along with interest.

Issues Involved

  1. Whether the petitioner was contractually entitled to GST payment separately over and above the tendered rate.
  2. Whether the respondents' failure to act on the technical committee's own decision (Ext.P16) to sanction 12% GST warranted a court direction.

Petitioner's Arguments

  • Clause 3.3.3 of the tender required rates to be quoted excluding GST, which was to be paid separately per prevailing government orders — hence GST is payable in addition to the base tendered value.
  • The technical evaluation committee itself had decided (per Ext.P16) to sanction payment of GST on the bills, but the respondents took no action to release this even after being so directed.
  • A government circular (Ext.P17) specifically mandated that payment for public works be made at contract rates plus applicable GST.
  • Kerala High Court precedents — C.A. George v. State of Kerala and Sebastian Jose v. State of Kerala (both later affirmed) — supported the position that a bidder directed to quote rates excluding GST cannot be denied separate GST payment.

Respondent's Arguments

  • Clause 3.3.5 of the tender stated that GST or any other applicable tax shall be payable by the contractor, and government would not entertain any claim in this regard.
  • The petitioner was aware of the tax component and was required to quote rates inclusive of tax; the circular relied on by the petitioner (Ext.P17) did not apply since administrative and technical sanctions for the project predated it.

Court Order / Findings

  • The Court examined Clauses 3.3.3 and 3.3.5 together and found that since the department itself directed bidders to quote rates exclusive of GST, the petitioner could not be faulted for excluding GST from its bid.
  • It relied on the precedents cited by the petitioner (C.A. George and Sebastian Jose, both upheld in appeal) as supporting the general proposition that a bidder directed to exclude taxes from the bid is entitled to separate payment of GST.
  • However, rather than finally declaring the petitioner's entitlement, the Court disposed of the writ petition with a direction to Respondents 1 and 4 to reconsider the petitioner's request for GST payment, taking into account Ext.P16, Ext.P17 and the cited judgments, after affording a hearing, within one month.

Important Clarification

Although the Court's discussion leans favourably toward the petitioner's reading of the tender clauses and cited precedent, the operative order does not itself declare a final entitlement to GST payment — it remits the matter for a fresh, reasoned decision by the authorities within one month, informed by the precedents discussed. Contractors relying on this case should note it as persuasive discussion, not a final, self-executing GST payment order.

Sections Involved

  • Central Goods and Services Tax Act, 2017 (GST on tendered works contract value)
  • Kerala Goods and Services Tax Act, 2017

Decision – In Favour of

Disposed of with a direction to reconsider the claim within one month in light of binding precedent — a result leaning toward the Petitioner's position, but not a final, conclusive declaration of entitlement.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C).No.855 of 2022
  • Coram: Hon'ble Mr. Justice Viju Abraham
  • Date of Judgment: 18.08.2023

Link to Download the Order

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