2018 (9) TMI 2047 - HC - GST

Award of tender - cancellation of bid - bid in compliance with the tender or not - contention of petitioner is that the bid of respondent no.2 was required to be held as non responsive by the MSRTC inasmuch as the bid was not complying one of the tender conditions - HELD THAT - It is not in dispute that the bidders requiring to take into consideration the GST, was not in contemplation when the original tender notice was issued and thus, a corrigendum dated 5 January 2017 was issued providing that the bidders should take into consideration the Goods and Service Tax rates which would be notified. Thus, the bidders including the petitioner and respondent no.2 were required to take into consideration the said condition of Goods and Service Tax as notified in the corrigendum. The bid of Respondent No. 2 though initially quoted a total CAPEX cost of ₹ 15.75 Crores on the basis of a base price of ₹ 14.82 Crores and tax amounting to ₹ 0.93 Crores, was revised to a base price of ₹ 13.71 Crores on which a GST of ₹ 2.72 Crores would be made applicable thereby taking to total CAPEX cost to ₹ 16.45 Crores and also no revision was allowed in the total OPEX cost and the entire burden of the enhanced tax rates was to be borne by Respondent No.2. The MSRTC has rightly contended that additional negotiations and acceptance by further discount by the L 1 bidder/respondent no.2 during negotiations, cannot be considered as a reason to cancel their bid. Circular dated 11 September 1917 issued by the State Government permitted negotiations with L 1 in view of the implementation of GST. Even otherwise under law there was nothing illegal for the MSRTC to have negotiations with respondent no.2 and also on the GST issue, so that the lowest bid becomes more beneficial to MSRTC. It is evident that the original tender condition pertaining to the effect that the CAPEX cost not to exceed more than 50% of the total cost, was required to be read in conjunction with the corrigendum which provided for GST to be accounted for by the bidders. The Government circular also permitted negotiation in that behalf by the tendering authority. There are no approach of MSRTC in any manner unconscionable or arbitrary to accept the lowest bid of respondent no.2. MSRTC has acted in accordance with the tender conditions, and in view of the introduction of new regime of GST during the tendering process, the decision of the MSRTC cannot be said to be contrary to the tender conditions read with the corrigendum. Petition dismissed.

Summary

Issues:
Challenge to the award of a tender for Vehicle Tracking System and Passenger Information System based on non-compliance with bid conditions.

Analysis:
The petitioner challenged the award of a tender by Maharashtra State Road Transport Corporation (MSRTC) to a successful bidder, contending that the bid did not comply with the tender conditions. Specifically, the petitioner argued that the bid exceeded the CAPEX cost limit of 50% of the total cost as stipulated in the tender conditions. The petitioner sought to quash the award and demanded a fresh bidding process.

The MSRTC defended its decision, stating that the bid was made before the introduction of Goods and Service Tax (GST) rates and that negotiations with the successful bidder were conducted post-GST implementation to adjust the tax components in the bid. The MSRTC contended that the negotiated price fell within permissible parameters considering the GST rates.

Respondent no.2, the successful bidder, argued that the levy of GST was unforeseen when the tender was issued, and the negotiated price was within acceptable limits post-GST implementation. They cited a government circular providing guidelines for tenders accepted before GST implementation but with contracts issued after the GST rollout.

The Court noted that the original tender did not account for GST rates, leading to a corrigendum instructing bidders to consider GST in their bids. It found that respondent no.2, as the lowest bidder, was entitled to negotiate post-GST implementation to adjust the bid prices accordingly. The Court concluded that the negotiations and adjustments made by respondent no.2 were within the permissible framework, and the MSRTC acted in accordance with the tender conditions and the corrigendum.

The Court rejected the petitioner's contention that the award breached the tender conditions, stating that the MSRTC's decision was not arbitrary and was in line with the tender requirements and the introduction of GST during the bidding process. It upheld the award of the tender to respondent no.2, concluding that the petition lacked merit and was thus rejected without costs.