Lokesh vs. Indore Smart City Devlopment Lemited

Held

The Court held that the petitioner's objection regarding the payment of GST on the upfront premium amount was not tenable. The Court found that Clause 20.02 of the NIT specifically mandated the deposit of 25% of the amount within 21 days from the declaration of the successful bidder, along with 18% GST on the sanctioned premium amount. This liability was known to the petitioner at the time of submitting the bid. The Court reasoned that the petitioner unnecessarily raised a frivolous objection to avoid the deposit and caused financial loss to the respondent. Regarding the opportunity of hearing, the Court noted that the respondent granted additional time thrice, but the petitioner remained adamant. Therefore, after the final notice, the cancellation of the allotment and the issuance of a fresh tender were justified. The Court found no scope for interference in the respondent's actions, as the petitioner failed to comply with the tender and allotment terms without valid reasons. The writ petition was dismissed, and the respondents were at liberty to claim damages.

Facts

The petitioner, Laxmi, participated in a tender floated by Indore Smart City Development Ltd. (Respondent No. 1) for the long-term lease of 11 shops. The petitioner's bid for shop No. 5 was the highest, and an allotment letter was issued on July 18, 2023, requiring a deposit of 25% of the premium amount (Rs. 13,75,197/-) plus 18% GST within 21 days. The petitioner objected, stating GST was not payable on the premium amount. Despite subsequent notices and opportunities, including a final notice on June 28, 2024, the petitioner did not deposit the amount, citing objections to the GST demand and construction delays affecting loan availability. Consequently, the respondent cancelled the allotment and issued a fresh tender. The petitioner filed a writ petition challenging the cancellation.

Key Issues

1. Whether the demand for 18% GST on the upfront, one-time premium amount for the lease of shops is legally sustainable under the Goods and Services Tax (GST) regime, as contended by the petitioner? 2. Whether the cancellation of the tender allotment by the Chief Executive Officer, Indore Smart City Development Limited, was justified, considering the petitioner's objections and the procedural steps taken by the respondent, as argued by the petitioner? Petitioner's Arguments: The petitioner argued that GST is not liable to be deposited on the premium amount but only on the rent payable after construction and possession. They also contended that they were not granted a proper opportunity of hearing before cancellation and that the fresh NIT was issued prior to the cancellation of their allotment. The petitioner expressed readiness to deposit the premium amount. Respondent's Arguments: The respondent contended that the terms and conditions of the NIT and allotment clearly stipulated the deposit of 25% of the bill amount along with GST within 21 days. They argued that the petitioner's objection was raised after allotment and was not tenable, and that sufficient time was given for deposit, leading to financial loss due to non-allotment. They also distinguished the petitioner's case from other allottees who had deposited partial amounts.