2019 (1) TMI 1609 - HC - GST

Scope of the contract / Bid - Applicable rate of tax post GST - Validity of Government order - payment of the outstanding due payable to the petitioner - difference in tax rate due to introduction of GST regime - HELD THAT - The petitioner had entered into a contract with the respondents Board before the GST regime came into force. Therefore, a specific clause has been inducted in the bid document under clause 48.1. In the said circumstances, the GO impugned in this writ petition has been issued taking into consideration of the implementation of GST and directing the procuring entities to enter into supplemental agreements after negotiating with the existing works contractors, which in the considered opinion of this court would no way cause any prejudice to the petitioner. As the interests of the contractors are fully protected under the impugned GO and supplemental agreements will be entered into only after a negotiation with the existing contractors and as such no prejudice would be caused to the petitioner. Power to issue such GO - HELD THAT - The tender notification issued by the 2nd respondent is governed by the provisions of the Tamil Nadu Transparency in Tenders Act, 1998 and Section 21 of the said Act empowers the authority to issue any Government Order for the purpose of removing any difficulties in the implementing the Act and in view of the introduction of GST, in order to remove the difficulties, the impugned GO came to be issued and hence, it cannot be contended that the 1st respondent had no jurisdiction to issue such a GO. Violation of principles of Natural Justice - HELD THAT - The impugned order has been issued in violation of the principles of natural justice is also cannot be countenanced for the simple reason that, it is only a general GO issued in respect of the existing contractors who have entered into agreements prior to the implementation of GST. As already held, the impugned Go has been issued only to remove the difficulties in implementing the GST regime. Petition dismissed.

Summary

Issues:
Challenging the validity of Government Order, payment of outstanding dues, validity of supplemental agreements, violation of principles of natural justice.

Analysis:
1. The petitioner, a contractor, challenged the validity of a Government Order (G.O.) and subsequent orders related to a contract awarded for water supply distribution. The petitioner sought direction for payment of outstanding dues as per the bid document and compliance with a specific G.O. issued by the 2nd respondent.

2. The petitioner participated in a tender issued before the introduction of the Goods and Services Tax (GST) regime. After rounds of discussions, the bid document was amended to address tax implications due to GST implementation. The petitioner was awarded the contract, and bills were raised as per the bid document's conditions.

3. Subsequently, the 1st respondent issued an impugned G.O. directing negotiation of existing contracts with contractors to adjust for GST. The 2nd and 3rd respondents issued orders for supplemental agreements based on the G.O., which the petitioner challenged in the writ petition.

4. The respondents argued that the G.O. was issued under the Tamil Nadu Transparency in Tenders Act, 1998, to address difficulties arising from GST implementation in existing contracts. They contended that negotiations for supplemental agreements were necessary to adjust for GST and that the petitioner was bound to execute such agreements.

5. The petitioner's counsel argued that the impugned G.O. and orders were invalid and caused uncertainty, as they allowed deduction of tax differences without consent. They claimed a violation of natural justice as the petitioner was not heard before the orders were issued.

6. The Court held that the impugned G.O. was issued to address GST implementation issues in existing contracts and did not prejudice the petitioner. The G.O. provided for negotiations before entering into supplemental agreements, ensuring contractor interests were protected.

7. The Court found that the G.O. was within the authority granted by the Transparency in Tenders Act, 1998, to address implementation difficulties. It dismissed the argument of violation of natural justice, stating that contractors could raise objections before entering into supplemental agreements.

8. Ultimately, the Court found no merit in the writ petition and dismissed it, along with the connected Writ Miscellaneous Petition, without costs.

This detailed analysis covers the issues raised in the legal judgment comprehensively, addressing the arguments presented by both parties and the Court's reasoning in reaching its decision.