Union Of INDIA & Others vs. Bharat Forge LTD. & Another
Held
The Supreme Court set aside the High Court's judgment. The Court held that the tender clauses, particularly Clause 2.9.2, clearly placed the onus on the tenderer to acquaint themselves with all applicable taxes and duties, including the correct HSN Code and GST rate. The liability to pay GST rests with the supplier, who must make informed decisions regarding HSN codes and tax rates. The Court found no statutory duty on the appellants (purchaser) to provide the correct HSN code or GST rate, thus a writ of mandamus was not maintainable. The Court emphasized that the purchaser seeks the lowest bidder and it is the bidder's commercial expediency to determine their quoted price, including tax components. However, to ensure tax compliance and prevent evasion, the Court directed that in all cases where a contract is awarded, a copy of the award document with material details should be forwarded to the concerned jurisdictional tax officer. Tenderers were also directed to provide details of their assessing officers in their bids.
Facts
A Notice Inviting Tender (NIT) was issued for a product, but it did not specify the applicable HSN Code. Bidders were also required to state the percentage of local content as per the 'Make in India' Policy. The writ petitioner (1st Respondent) quoted a GST rate of 18%, while the L1 bidder quoted 5%. This resulted in a significant price difference, with the petitioner's total price being Rs. 8,29,540/- and the L1 bidder's being Rs. 6,30,000/-. The petitioner alleged that this variance distorted the tendering process. The High Court directed the tendering authority to clarify the correct HSN Code and GST rate to ensure a level playing field. The Union of India and others (Appellants) filed a Special Leave Petition (SLP) before the Supreme Court.
Key Issues
1. Whether a writ of mandamus can be issued directing the tendering authority to clarify the correct HSN Code and applicable GST rate (18%) for the procurement product to ensure a uniform bidding process, as per Section 226 of the Constitution of India. Contentions: Petitioner/1st Respondent: Argued that the absence of a specified HSN Code and GST rate in the tender documents led to an uneven playing field, distorting the tendering process. Sought a direction for clarification to ensure fair competition. Revenue/Appellants (Union of India & Others): Contended that the tender clauses placed the responsibility on the bidders to ascertain and quote the correct HSN Code and GST rates. Argued that the purchaser (appellants) is not responsible for taxes paid due to misclassification or misapprehension by the supplier. Relied on Clauses 2.7.6, 2.7.7, 2.8.6, and 2.9.2 of the tender document. Argued that there was no statutory duty on the appellants that could be enforced via a writ of mandamus.
Sections Cited
Section 9(3), Section 226
AI-generated summary — verify with the full judgment below
A B C D E F G H 1012 SUPREME COURT REPORTS [2022] 17 S.C.R. [2022] 17 S.C.R. 1012 1012 UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. & ANOTHER (Civil Appeal. No. 5294 of 2022) AUGUST 16, 2022 [K. M. JOSEPH AND HRISHIKESH ROY, JJ.] Goods and Services Act, 2017 – Notice Inviting Tender (NIT) for procurement of product was published – However, neither the NIT nor the bid documents, mention the relevant HSN Code applicable to the product – The bidders were also directed to specify the percentage of local content of the material being offered, in accordance with the ‘Make in India’ Policy and preference would be given to those projects, which have at least 50 per cent local content – The Writ petitioner – 1st Respondent(L4) quoted price with GST rate @18%, L1 to L3 quoted the price with GST rate at @5% due to which the total price of Writ Petitioner became Rs. 8,29,540/- whereas the total price of the L1 became Rs.6,30,000 – Allegedly, the variance in quoted GST rates has distorted the tendering process – Hence, 1st Respondent filed writ petition – Meanwhile, a subsequent tender in regard to the product was granted to the writ petitioner – Hence, the issue left for determination was w
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