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TMI Blog2018 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... revision of any tax, the petitioner shall not be entitled to change the rate contract / revision of price on any ground which otherwise is not permissible as per the terms and conditions of the tender document / rate contracts. Merely because the VAT / excise duty has been abolished, which was there at the relevant time when the prices were quoted and the rate contracts were executed and thereafter has been substituted by the GST, the petitioners cannot be permitted to change the rate contract / rates and cannot be permitted to have the price revision. Otherwise the same shall be contrary to the terms and conditions of the relevant tender documents / rate contracts. At the relevant time VAT liability was 5% and the excise duty liability was 2%. As per the GST, now the total tax liability would be 12% - Mrely because now the VAT and excise duty have been deleted and instead the same is substituted by GST which may be at 12%, the petitioners cannot claim the price revision on the aforesaid ground. The grant of any relief as prayed in the present petitions would tantamount to varying terms and conditions of the tender document / rate contracts which in exercise of powers und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Structure whereby 12% GST has been introduced on goods that are supplied by the petitioners to respondent No.2 GMSCL. [2.1] By way of amendment the petitioners have also prayed to quash and set aside the impugned decision of the respondent No.2 GMSCL being Agenda Item No.22/15 and Agenda Item No.22/25 of the Minutes of 22nd Meeting of the Board of Directors of GMSCL dates 23.08.2017. [3.0] For the sake of convenience, Special Civil Application No.18765/2017 is treated as a lead matter and the facts in the said Special Civil Application are narrated which are as under: [3.1] That the petitioners are engaged in the business of manufacture and distribution of Surgical Dressing items such as Bandages, Gauze etc. That the respondent No.2 GMSCL is a procuring agency of Government of Gujarat which procures the drugs, surgical items etc. from different manufacturers and distributors for the supply of the same to the Government Hospitals throughout the State of Gujarat. That the GMSCL invited the tenders from the eligible suppliers to supply different items. The petitioners awarded the contracts and were asked to supply 5 different items bearing Item Code 4006, 4024, 4009, 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 4006. Rate Contract bearing No.GMSCL / Drugs / RC / 5884006 / D166 / 6853668547 /20162017 for Item Code No.4006 and Rate Contract bearing No.GMSCL / Drugs / RC / 5884024 / D93 /6481564826 / 20162017 for Item Code No.4024 were respectively entered on 28.09.2016 and 06.09.2016 which were valid up to 31.05.2018. [3.2] It is the case on behalf of the petitioners that as per the tender terms, the petitioners were asked to provide rates prepacking unit (without applicable VAT / CST) as well as provide percentage of VAT / CST, if applicable in different columns. According to the petitioners, as per Clause 13(b)9 of the respective tender documents dated 22.07.2015, 10.11.2015 and 17.02.2016 as well as Bidding Schedule attached to the tender documents, petitioners had to include Excise Duty, Packing, Forwarding, Insurance Charges etc. in prepacking unit (without applicable VAT / CST). Thus, according to the petitioners, VAT / CST were to be borne by the GMSCL which although were recovered by the petitioners but was indeed paid to the State Government or appropriate Authority on behalf of the GMSCL. [3.3] It appears that on 12.04.2017, based on recommendation of GST Council, Parliame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments in their price for those items which petitioners were supplying. That in the meantime the GMSCL in its meeting held on 23.08.2017 wherein two Agenda Items i.e. Agenda Item No.22/15 titled as Amendment in Rate Contract due to GST and Agenda Item No.22/25 titled as Amendment in Tax due to GST were passed and the GMSCL resolved that since the Finance Department, Government of Gujarat did not agree to revise a rate due to GST effect, the Board decided to seek consent of firms for supply of the items as per rate contract . It was also resolved that if the firms do not agree, the GMSCL will float fresh tender and as per the agreement terms and conditions for the existing rate contract for such items . [3.4] Feeling aggrieved and dissatisfied with the impugned decision in the communication dated 31.08.2017 (AnnexureA) by which the petitioners were requested to make available their consent in connection of agreement to supply as per the GST rates, without increasing the existing rates and the impugned decision taken by the GMSCL in Agenda Item Nos.22/15 and 22/25 by which it has been decided to seek consent of firms for supply of the items as per the rate contract, the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it which were offered by the petitioners and which came to be accepted by the GMSCL, thereafter cannot be revised under any pretext or reason, including in case of revision of duty / Excise / cost. It is submitted that by impugned communication dated 31.08.2017 as such the GMSCL has asked the petitioners to reduce the rates prepacking unit (without applicable VAT / CST) against those mentioned in the acceptance letter and rate contract to cover the change in tax structure which was to be borne by the GMSCL. It is submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that from the illustration provided in the impugned communication dated 31.08.2017, it is evident that the preGST rates have been shown in which basic rate i.e. prepacking unit (without applicable VAT / CST) has been taken as ₹ 100 on which 5% VAT or CST was applicable and the final amount of the product was ₹ 105/. It is submitted that against which postGST rates have been shown in which basic rate that is prepacking unit (without applicable VAT / CST) has been reduced to ₹ 93.74 on which 6% SGST i.e. ₹ 5.63 and 6% CGST i.e. ₹ 5.63 is applied an the final amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of goods in question, no one had kept in mind the GST / rates of GST. It is submitted that the rates were offered considering the existing taxes. It is submitted that rate contract was over and above the tax liability whatever may be. It is submitted that in any case rate contract was not inclusive of tax and it was over and above and subject to revision of the tax liability. [5.5] It is further submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that as such the relevant clauses of the tender documents and the rate contracts more particularly Clause 49 shall bind both the parties. It is submitted that Clause 49 of the tender document specifically provide that claim of price revision of finished goods under any pretext or reason, including the revision of duty / excise / cost will not be allowed at any stage after the last date of submission of the tender. It is submitted that same shall be applicable to GMSCL also. [5.6] It is further submitted by Shri Nanavati, learned Counsel appearing on behalf of the petitioners that even otherwise the impugned decisions can be said to be and/or amounts to novation in the contract which may be on ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government is right in not providing the price revision of rate contract. Making above submissions and relying upon the decisions of the Hon ble Supreme Court in the case of Rashtriya Ispat Nigam Limited vs. Dewan Chand Ram Saran reported in (2012) 5 SCC 306 (Paras 39 and 42) and in the case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and Another reported in (2016) 16 SCC 818 , it is requested to dismiss the present petitions. [6.1] Shri Trivedi, learned Advocate General appearing on behalf of the State has also requested to dismiss the present petitions and not to exercise powers under Article 226 of the Constitution of India in view of the specific arbitration clause in the contract in case of any dispute between the parties by relying upon the decisions of the Hon ble Supreme Court in the case of State of U.P. and Others vs. Bridge Roof Company (India) Ltd. reported in (1996) 6 SCC 22 (Paras 15, 16 and 21) ; Kerala State Electricity Board and Another vs. Kurien E. Kalathil and Others reported in (2000) 6 SCC 293 (Para 10 and 11) and Joshi Technologies International Inc. vs. Union of India and Others reported in (2015) 7 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to seek the opinion of the Finance Department, Government of Gujarat. It is submitted that the Finance Department of the Government of Gujarat after due considerations of the terms of the contract opined that as there was no provision which entitled the variation of price as sought for, the GMSCL to take steps in accordance with the terms of the contract. It is submitted that thereafter opinion of the Finance Department came to be considered by the Board of Directors of the Corporation in its 22nd Meeting held on 23.08.2017. It is submitted that the Board of Directors consisting of Additional Chief Secretary (Medical Services and Medical Education Health and Family Welfare Department) as Chairman and other members after due consideration of the file resolved that the representation made is contrary to the terms of the contract and could not be acceded to and call upon the vendors to give confirmation regarding supply at the contracted price and in the event of their failure to take further steps in accordance with terms of the contract. Relying upon Clause 10, 13(b), 16, 49 of the Tender Documents and Clause 26 of the Rate Contract, it is submitted that so far as fixation of pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er documents / rate contracts, which is not permissible in exercise of powers under Article 226 of the Constitution of India. Making above submissions and relying upon above decisions, it is requested to dismiss the present petitions. [8.0] Now, so far as the Special Civil Application No.17991/2017 is concerned, Ms. Minu Shah, learned Advocate appearing on behalf of the petitioners has adopted the submissions made by Shri Nanavati, learned Counsel appearing on behalf of the petitioners of Special Civil Application Nos.16765/2017 and 16773/2017. It is submitted that the additional facts in Special Civil Application No.17991/2017 is that earlier the liability to pay the VAT as well as excise duty was upon the supplier and in the case of Special Civil Application Nos.16765/2017 and 16773/2017 the liability was only to pay VAT upon the suppliers. [9.0] Heard learned Counsel appearing for respective parties at length. At the outset it is required to be noted that sum and substance of the prayer of the petitioners is that they may be permitted to revise the price in view of the change in the tax structure by introducing the GST. [9.1] It is the case on behalf of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [9.3] Considering the aforesaid relevant clauses and even the clauses mentioned in the rate contract which were accepted by even the petitioner suppliers, the prices offered / rates shown against the item in all cases, shall be under the net prices inclusive of all duties and sundries. As per Clause 13(b) even no payment against any duties / delivery charges etc. shall be considered in separate heading under any circumstances. As per Clause 49 of the tender document the claim of price revision of any finished goods under any pretext or reason, including the revision of duty / excise / cost shall not be allowed at any stage after the last date of submission of the tenders. Similar are the conditions of the rate contracts. Under the circumstances when the rate contract was inclusive of the duties / taxes / levies and there is no clause for variation / price revision in case of revision of any tax, the petitioner shall not be entitled to change the rate contract / revision of price on any ground which otherwise is not permissible as per the terms and conditions of the tender document / rate contracts. At the cost of repetition it is observed that as such the price quoted as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tender document / rate contracts which in exercise of powers under Article 226 of the Constitution of India shall not be permissible. [10.0] At this stage few decisions of the Hon ble Supreme Court relied upon by the learned Counsel appearing on behalf of the State are required to be referred to. [10.1] In the case of Afcons Infrastructure Limited (Supra), the Hon ble Supreme Court in paras 11 to 16 have observed and held as under: 11. Recently, in Central Coalfields Ltd. v. SLLSML (Joint Venture Consortium)5 it was held by this Court, relying on a host of decisions that the decisionmaking process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decisionmaking process is mala fide or is intended to favour someone. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. In other words, the decision making process or the decision should be perverse and not merely f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven. 16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court. [10.2] At this stage the decision of the Hon ble Supreme Court in the case of Rashtriya Ispat Nigam Ltd. (Supra) is also required to be referred to and considered. In the case before the Hon ble Supreme Court the question was whether under the relevant clause 9.3 of the terms and conditions of the contract between the parties, an employer Rashtriya Ispat Nigam Ltd. was right in deducting the service tax from the bills of the respondent contractor ? The relevant clause 9.3 in the said case was as under: 9.3. The contractor shall bear and pay all taxes, duties and other liabilities in connection with discharge of his obligations under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty on the imports though this duty came into force subsequent to the relevant contract. The relevant clause 2(b) read as follows: (SCC p. 479, para 16) 16. ... 2. (b). All taxes and duties in respect of job mentioned in the aforesaid contracts shall be the entire responsibility of the contractor Reading this clause and the connected documents, this Court held that they leave no manner of doubt that all the taxes and levies shall be borne by the contractor including this countervailing duty. [10.3] In the present case as observed hereinabove as such the liability to pay GST under the GST / CGST Act is upon the supplier. As observed hereinabove the price quoted and the rate contract was inclusive of all the levies and taxes. Therefore, the petitioners shall not be entitled to the revision of price as sought. [11.0] Now, so far as the submission on behalf of the petitioners that so far as other Corporations in Rajasthan, Tamilnadu, Kerala etc. have permitted the suppliers to change the rates quoted and have considered the change in tax structure and have granted the benefit by revising the rate contracts by the suppliers is concerned, it is required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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