Public Works Department vs. M/S. P. Samiappa Gounder And Bros

Facts

The Public Works Department (appellant) issued a tender for a reservoir construction project. The writ petitioner's tender was accepted, and an agreement was signed. The GST regime came into effect on July 1, 2017, necessitating a reworked agreement. The Government issued G.O.Ms.No.296 on October 9, 2017, to provide guidelines for estimating subsumed taxes in contract values. The dispute arose over whether Paragraph 10(a) or 10(c) of the G.O. should apply to the petitioner's case. The department insisted on Paragraph 10(c), while the petitioner argued for Paragraph 10(a). The petitioner filed a writ petition seeking directions to apply Paragraph 10(a) and remit the GST component. The single judge allowed the writ petition, leading to the present writ appeal by the department.

Held

The Court held that the writ petitioner's case squarely falls under Paragraph 10(a) of G.O.Ms.No.296, Finance Department, dated 09.10.2017, and not Paragraph 10(c). The reasoning was based on the fact that the tender was an item-wise tender, and the petitioner was required to work out their own rates independently, without reference to the Public Works Department's estimates. The Court noted that the tender notification explicitly stated that tenderers should work out their own rates without reference to departmental estimates, which are not open for inspection. This aligns with the conditions described in Paragraph 10(a), which deals with suppliers furnishing a break-up of taxes within the quoted value. The Court found that the single judge had correctly applied this interpretation, referencing previous High Court judgments that upheld the application of Paragraph 10(a) in similar circumstances. The Court did not go into the details of quantification but directed the petitioner to furnish all relevant facts and figures to the department. The department is to then enter into a supplementary agreement with the petitioner within six weeks thereafter for the quantification of the GST component.

Key Issues

1. Whether the writ petitioner's case, involving an item-wise tender where the tenderer worked out their own rates without reference to departmental estimates, falls under Paragraph 10(a) or Paragraph 10(c) of G.O.Ms.No.296, Finance Department, dated 09.10.2017, for determining the value of subsumed taxes under GST laws? Petitioner's contention: The petitioner argued that their contract was an item-wise tender and their bid was not based on the Schedule of Rates (SOR) maintained by the department. They relied on the fact that they had to work out their own rates. They also cited previous judgments of the High Court in similar cases (W.P.(MD).No.15967 of 2020 and W.P.Nos.21196 and 21198 of 2019) which held that parties are governed by Paragraph 10(a) in such scenarios. Revenue/State's contention: The department contended that only Paragraph 10(c) of the G.O. was applicable. This paragraph deals with estimating subsumed tax based on departmental estimates and revised SORs.