# UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. & ANOTHER

- **Citation:** [2022] 17 S.C.R. 1012
- **Court:** Supreme Court of India
- **Decided:** 2022-08-16
- **Case number:** Civil Appeal. No. 5294 of 2022
- **Bench:** K. M. Joseph, Hrishikesh Roy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-others-v-bharat-forge-ltd-another-35518
- **Pages:** 46

## Headnote

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
whether writ of mandamus can be issued directing the tendering
authoring to clarify that the procurement product must be taxed @
18% under the Relevant HSN Code, to ensure a uniform bidding -
High Court issued a direction to respondent no.2-Appellant(L1) that
if the GST value is to be added in the base price to arrive at the
total price of offer for the procurement of products in a tender and
is used to determine interse ranking in the selection process then
the appellant should get a clarification regarding correct HSN Code
from GST authorities for the procurement product and mention the
same in the bid document, so as to ensure Level Playing Field -
Aggrieved Appellants filed SLPbefore the Supreme Court - Held :
Clause 2.7.6 in Tender document provide that all the bidders/
tenderers while quoting the rates should clearly indicate the rate of
applicable duties and taxes included in the prices quoted by them -
As per Clause 2.7.7, tenderers should ensure that they are GST
compliant and their quoted tax rates are as per GST Law - Clause
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2.8.6, provides that the purchaser (appellants) will not be
responsible for the payment of taxes and duties paid by the supplier,
on the basis of the misclassification or a misapprehension of law -
Clause 2.9.2, provides that the information about the tax liability is
not forthcoming in the bid, the bid will be considered as inclusive -
It provides for a clear duty with the tenderer to acquaint themselves
with all the applicable taxes and duties - Clause 2.9.2, which makes
it clear that a tenderer may quote a rate without including any tax
component - Hence, successful tenderer is, liable to pay the GST
by filing returns and carrying out self-assessment - The Officer,
dealing with the supplier, would have jurisdiction in the matter in
order to ensure that the successful tenderer pays the tax due and to
further ensure that, by not correctly quoting the GST rate, there is
no tax evasion - The appellants shall indicate that the, tenderers
will, in their bids, indicate the details of their Assessing Officers so
that appellants can effectively comply with the direction given -
The judgment of High Court set aside.
Writ of Mandamus - Scope of - Writ of Mandamus would lie
only when a Statute imposes a duty and there is a failure in the
discharge of duty - Mandamus would lie if the Authority, which had
a discretion, fails to exercise it and prefers to act under the dictation
of another Authority - Writ of Mandamus or a direction in the nature
thereof had been given a very wide scope in the conditions prevailing
in this country and it is to be issued wherever there is a public duty
and there is a failure to perform and the courts will not be bound by
technicalities and its chief concern should be to reach justice to the
wronged - The appellants have no statutory duty, which could have
been enforced in the manner done in the impugned Judgment -
There is no public duty which is enforceable.
Allowing the appeal, the Court
Held :1. It is c

## Text

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[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
whether writ of mandamus can be issued directing the tendering
authoring to clarify that the procurement product must be taxed @
18% under the Relevant HSN Code, to ensure a uniform bidding -
High Court issued a direction to respondent no.2-Appellant(L1) that
if the GST value is to be added in the base price to arrive at the
total price of offer for the procurement of products in a tender and
is used to determine interse ranking in the selection process then
the appellant should get a clarification regarding correct HSN Code
from GST authorities for the procurement product and mention the
same in the bid document, so as to ensure Level Playing Field -
Aggrieved Appellants filed SLPbefore the Supreme Court - Held :
Clause 2.7.6 in Tender document provide that all the bidders/
tenderers while quoting the rates should clearly indicate the rate of
applicable duties and taxes included in the prices quoted by them -
As per Clause 2.7.7, tenderers should ensure that they are GST
compliant and their quoted tax rates are as per GST Law - Clause
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2.8.6, provides that the purchaser (appellants) will not be
responsible for the payment of taxes and duties paid by the supplier,
on the basis of the misclassification or a misapprehension of law -
Clause 2.9.2, provides that the information about the tax liability is
not forthcoming in the bid, the bid will be considered as inclusive -
It provides for a clear duty with the tenderer to acquaint themselves
with all the applicable taxes and duties - Clause 2.9.2, which makes
it clear that a tenderer may quote a rate without including any tax
component - Hence, successful tenderer is, liable to pay the GST
by filing returns and carrying out self-assessment - The Officer,
dealing with the supplier, would have jurisdiction in the matter in
order to ensure that the successful tenderer pays the tax due and to
further ensure that, by not correctly quoting the GST rate, there is
no tax evasion - The appellants shall indicate that the, tenderers
will, in their bids, indicate the details of their Assessing Officers so
that appellants can effectively comply with the direction given -
The judgment of High Court set aside.
Writ of Mandamus - Scope of - Writ of Mandamus would lie
only when a Statute imposes a duty and there is a failure in the
discharge of duty - Mandamus would lie if the Authority, which had
a discretion, fails to exercise it and prefers to act under the dictation
of another Authority - Writ of Mandamus or a direction in the nature
thereof had been given a very wide scope in the conditions prevailing
in this country and it is to be issued wherever there is a public duty
and there is a failure to perform and the courts will not be bound by
technicalities and its chief concern should be to reach justice to the
wronged - The appellants have no statutory duty, which could have
been enforced in the manner done in the impugned Judgment -
There is no public duty which is enforceable.
Allowing the appeal, the Court
Held :1. It is clear that a Writ of Mandamus or a direction,
in the nature of a Writ of Mandamus, is not to be withheld, in the
exercise of powers of Article 226 on any technicalities. This is
subject only to the indispensable requirements being fulfilled.
There must be a public duty. While the duty may, indeed, arise
form a Statute ordinarily, the duty can be imposed by common
charter, common law, custom or even contract. The fact that a
duty may have to be unravelled and the mist around it cleared
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before its shape is unfolded may not relieve the Court of its duty
to cull out a public duty in a Statute or otherwise, if in substance,
it exists. Equally, Mandamus would lie if the Authority, which had
a discretion, fails to exercise it and prefers to act under dictation
of another Authority. A Writ of Mandamus or a direction in the
nature thereof had been given a very wide scope in the conditions
prevailing in this country and it is to be issued wherever there is
a public duty and there is a failure to perform and the courts will
not be bound by technicalities and its chief concern should be to
reach justice to the wronged. This Court is not dilating on or
diluting other requirements, which would ordinarily include the
need for making a demand unless a demand is found to be futile
in circumstances, which have already been catalogued in the
earlier decisions of the Supreme Court. [Para 18][1031-D-F]
2. It is clear that the Clauses read together will yield the
following result, bearing in mind also the GST regime. The liability
to pay tax under the GST regime is on the supplier. He must
make inquires and make an informed decision as to what would
be the relevant HSN Code applicable to the items and the rate of
tax applicable. Thereafter, when he makes the bid, the issue of
competition for winning the bid, would come into ordinarily clear
is to focus. The goal of the bidder ordinarily is to emerge
successful and bag the contract. The extent of profit that he would
earn, is a matter, which is essentially a matter to be decided by
him. He may, for germane reasons, wish to bag a contract, with
situations ranging from one extreme end of the spectrum, viz.,
even when the prospect of a loss stares at him, or a slightly
brighter outcome, viz., the contract working on a break-even basis
or moving on to an even more optimistic possibility, namely, of
the contract earning him profit, which he is willing to take at a
modest rate or a rate which he considers as reasonable in his
understanding and circumstances. This is a matter to be left to
the commercial expediency of the bidder. Now, when the matter
is viewed from the perspective of the purchaser, the purchaser
seeks to buy goods and services or both by awarding the contract
to the lowest bidder. When the purchaser happens to be the State,
it would be not fair or reasonable to not expect it to accept the
bid of the lowest bidder unless it decides to not accept the bid of
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the lowest bidder for reasons which are fair and legal. No doubt,
it is not the law that the Government is bound to accept the lowest
bid. It is always open to the Government for relevant, valid and
fair reasons, to not accept even the lowest bid. [Para 38][1042G-H; 1043-A-D]
3. When read in a holistic manner, the purport of the Railway
Board is that it is the responsibility of the bidder to quote the
correct HSN Number and the corresponding GST rate. This Court
have already unravelled the true scope of the relevant Clauses
and wide range of results that would follow on its true construction.
It may be true that the circular permits the purchaser to indicate
the HSN Number. The purchaser may indicate it. The other terms
of the circular clearly appear to indicate that the rate even if
indicated by the appellants will not detract from the tenderers
quoting the rate which is up to them. It is the rate quoted by the
tenderers which governs. It is the same which will be used to
carry out the ranking. The other terms also militate against a
public duty with the appellants as directed. The appellant seeks
to protect its best interest as a player in the commercial field.
The clauses are self-evident. [Para 46][1048-B-C, E-F]
4. Consequence of reading the word may in the letter dated
05.09.2017 as casting a mandatory duty, would bring this Court
to frontally face the question of how the purchaser would go about
implementing such a direction. Sections 96 to 103 of the Central
Act, as also of the State GST Act do provide for the mechanism of
advance ruling. If the purchaser is to include the HSN Code,
there must be a mechanism to give effect to what is directed by
the High Court, viz., "to clarify the issue with the GST Authorities
relating to the applicability of the correct HSN Code of the product
and thereafter mention in the NIT". This Court is at a loss to
further understand how in the name of producing a level playing
field, the State, when it decides to award a contract, would be
obliged to undertake the ordeal of finding out the correct HSN
Code and the tax applicable for the product, which they wish to
procure. This is, particularly so when the State is not burdened
with the liability to pay the tax. The liability to pay tax, in the case
before this Court, is squarely on the supplier. There are adequate
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safeguards and Authorities under the 60 GST Regime must best
secure the interests of the Revenue. [Para 47][1048-G-H; 1049D-E]
5. It is further contended that the circular cannot bind the
appellants who are only purchasers of the product. There is no
duty cast on the Board under the Central Act or on the
Commissioner under the State Act to issue any clarification, as
directed in the impugned Judgment. There is no duty cast on the
appellants to seek such direction. Therefore, the appellants are
right in contending that there is no statutory duty, which could
have been enforced in the manner done in the impugned
Judgment. There is no public duty which is enforceable. [Para
49][1050-C-D]
6. Unless Clause 2.9.2 is done away with, the tenderers
would be free to quote a lumpsum rate without including the tax
rate. The further and more important obstacle is the mechanism
or rather the absence of the same by which the purchaser of goods
and services (the appellants) can be compelled to ascertain the
correct HSN Code. The direction by the High Court is to clarify
with the Tax Authorities. This Court have noticed that there is
no provision for clarification, as such. The only provision which
clearly deals with classification is provision for advance ruling.
This Court have noticed the nature of the procedure in the
Chapter dealing with advance ruling. This Court would have to
assume that the appellants will be compelled to go through the
said cumbersome procedure and, at the end of it, proclaim the
HSN Code. The appellants purchase several goods and services.
Each time, the appellants purchase goods and services or both,
if the impugned Order is to be sustained, the appellants would
have to resort to the prolonged proceedings in a matter where
the appellant had no liability to pay the tax. All of this is premised
on the writ petitioner's quest for the perfect level playing field.
That apart, This Court have also noticed, how the interests of
the appellant, which it pursues as an actor in the commercial world,
but wearing the mantle of State obliging it to act fairly, would not
empower the Court in judicial review to mandate for a duty, not
supported by any Statute, the terms of the bidding document and
any other binding instrument. This Court have already found that
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Circular dated 05.09.2017, issued by the Board, does not provide
for the mandatory duty to specify the HSN Code. [Para 57][1053F-H; 1054-A-C]
7. Appellants have contended that the liability to pay the
GST, an indirect tax, lies with supplier of goods and services.
The exception which is admitted by the appellants is in cases
covered under Section 9(3) of the GST Act which provides for
reverse charge mechanism. Under the reverse charge
mechanism, the liability to pay tax is on the recipient of the goods
or services or both. This would indeed mean that if the appellants
are in the shoes of persons who become liable as recipients of
goods and services or both under Section 9(3), then it will be the
liability of the appellants to pay such tax. Strictly speaking this
question does not appear to arise on the facts. At any rate This
Court do not see how the writ petitioner can advance its case on
the basis of this aspect as it is essentially the look out of the
appellants. This Court must not be oblivious to the fact that the
complaint of the appellant is the denial of a level playing field
among the tenderers. It is obvious that the appellants as
purchasers of the goods and services are obliged to purchase
the goods and services which are otherwise compliant with the
tender conditions at the cheapest rate. In a case where it is liable
under revere charge mechanism, it would be the look out of the
appellant in public interest to ensure that it will end up purchasing
goods at the cheapest rate possible. It is elementary that even
the lowest bidder would not have right to have his bid accepted
and is always open to the appellants in public interest and in
accordance with the tender condition to reject even the lowest
bid. No doubt if the tax rate in such a case is separately insisted
upon, then on the rate acceptable to the appellants, the gross
outflow can be calculated consisting the amount to be paid to the
successful tenderer and the amount to be remitted to the revenue.
In this regard, this Court noticed from the tender condition relied
upon by the writ petitioner which this Court have extracted at
paragraph 58, what is contemplated is that the amount would be
deducted at the applicable GST rate from the bill under the
Reverse Charge Mechanism and deposited with the concerned
tax authority. If under the terms of the tender, what is contemplated
is that, in a case where the tax component is not included or it is
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included at a lower rate, the appellants are entitled to deduct the
actual rate of tax as payable by it under the Reverse Charge
Mechanism and the tender of such a person is accepted being
the lowest tender, then there can be no question of public interest
being prejudiced. If on the other hand, the tax rate is included
and the clause provides for deduction of the actual rate from the
bill, then also public interest may not be affected. This is all the
more reason for the tenderer specifically including the tax
component indicating the correct rate of tax. This is a matter
where the first appellant can consider giving appropriate
instructions. [Para 60][1055-E-H; 1056-A-E]
8. That the supplier of the goods and services, i.e., the
successful tenderer is, indeed, liable to pay the GST by filing
returns and carrying out self-assessment. There is also no dispute
that it is the Officer, dealing with the supplier, who would have
jurisdiction in the matter. In the said circumstances, in order to
also ensure that the successful tenderer pays the tax due and to
further ensure that, by not correctly quoting the GST rate, there
is no tax evasion, This Court think it is necessary to direct that,
in all cases, where a contract is awarded by the appellants, a copy
of the document, by which, the contract is awarded containing all
material details shall be immediately forwarded to the concerned
jurisdictional Officer. It is accordingly ordered. The appellants
shall indicate that the tenderers will, in their bids, indicate the
details of their Assessing Officers so that the appellants can
effectively comply with this direction. The Union of India and the
Railway Board shall ensure that this direction shall be complied
with by all units. [Para 61][1056-F-H; 1057-A]
Comptroller and Auditor General of India, Gian
Prakash, New Delhi and another v. K.S. Jagannathan
and another (1986) 2 SCC 679 : [1986] 2 SCR 17;
Andi Mukta Sadguru Shree MuktajeeVandas Swami
Suvarna Jayanti Mahotsav Smarak Trust and others v.
V.R. Rudani and others (1989) 2 SCC 691 : [1989] 2
SCR 687; Mansukhlal Vithaldas Chauhan v. State of
Gujarat (1997) 7 SCC 622 : [1997] 3 Suppl. SCR 705;
Reliance Telecom Ltd. and another v. Union of India
and another (2017) 4 SCC 269 : [2017] 4 SCR 972;
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Reliance Energy Ltd. and another v. Maharashtra State
Road Development Corpn. Ltd. and others (2007) 8 SCC
1 : [2007] 9 SCR 853; Sarvesh Refractories (P) Ltd. v.
Commissioner of Central Excise and Customs (2007)
13 SCC 601 : [2007] 12 SCR 444; RashtriyaIspat
Nigam Ltd. v. Dewan Chand Ram Saran (2012) 5 SCC
306 : [2012] 4 SCR 1 - referred to.
Case Law Reference
[1986] 2 SCR 17
referred to
Para 15
[1989] 2 SCR 687
referred to
Para 16
[1997] 3 Suppl. SCR 705
referred to
Para 17
[2017] 4 SCR 972
referred to
Para 19
[2007] 9 SCR 853
referred to
Para 21
[2007] 12 SCR 444
referred to
Para 40
[2012] 4 SCR 1
referred to
Para 41
CIVIL APPELLATE JURISDICTION : Civil Appeal No.5294
of 2022.
From the Judgment and Order dated 18.12.2020 of the High Court
of Judicature at Allahabad in Writ Petition No.17620 of 2019.
N. Venkataraman, ASG, Jitin Singhal, Mohd. Akhil, Ms. Seema
Bengani, Sughosh Subramanyam, Amrish Kumar, Advs. for the
Appellants.
Amar Dave, Mahesh Agarwal, Rishi Agrawala, Ankur Saigal, Ms.
Sayaree Basu Mallik, Divyanshu Srivastava, E. C. Agrawala, Girdhar
Govind, Ms. Reshmi Rea Sinha, Ms. Neetu Singh, Advs. for the
Respondents.
The Judgment of the Court was delivered by
K. M. JOSEPH, J.
1. Leave granted.
2. By the impugned Judgment, High Court has disposed of the
Writ Petition filed by the first respondent (hereinafter referred to as the
"Writ Petitioner") with the following directions:
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"We, therefore, find it expedient to Issue a direction to respondent
no.2 namely, the General Manager, Diesel Locomotive Works,
Varanasi that if the GST value is to be added in the base price to
arrive at the total price of offer for the procurement of products
in a tender and is used to determine Interse ranking in the selection
process, he would be required to clarify the Issue, If any, with the
GST authorities relating to the applicability of correct HSN Code
of the procurement product and mention the same in the NIT
(Notice inviting tender) tender/ bid document, so as 'to ensure
uniform bidding from all participants and to provide all tenderers/
bidders a 'Level Playing Field'."
3. The appellants take exception to both the reasoning employed
by the High Court and the final direction, as aforesaid.
4. A global tender was published on 11.04.2019 by the third
appellant (Diesel Locomotive Work through its Manager, Varanasi). Etenders were invited for procurement of turbo wheel impeller balance
assembly 2BLW Part No. 16080385 (hereinafter referred as, 'the
product').The writ petitioner was one of the tenderers. So were among
others Respondents 6 to 8 in the Writ Petition. Respondent No. 6 in the
Writ Petition is arrayed as respondent No. 2 in this appeal. Respondent
No.7 and 8 in the Writ Petition were initially arrayed as Respondents 3
and 4 in the Special Leave Petition but later deleted on the request of the
appellants.
5. On the basis of the tabulation carried out by the third appellant,
respondent no.2 in the appeal emerged as L1 whereas respondent nos.
7 and 8 to the writ petition emerged as L2 and L3, respectively. The writ
petitioner emerged only as L4. It is thereupon that the first respondent
filed the writ petition praying for the following reliefs:
"
i.
a writ order or direction in the nature of mandamus
commanding and directing the Respondent No.1, i.e., the
Tendering Authority to clarify that the Procurement Product
must be taxed @ 18% under the Relevant HSN Code, i.e.,
84148030, to ensure a Uniform Bidding from the parties,
and also to ensure a level playing field for all Bidders/
Suppliers;
ii.
a writ order or direction in the nature of mandamus
commanding and directing the respondents stay the effect
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of the opening of the Subject Tender No. 10191001 by the
Respondent No.1 and subsequent awarding of the category/
rank from L1-L6 to the various parties to the Tender;
iii.
a writ order or direction in the nature of mandamus
commanding and directing the respondents in light of the
incorrect GST Rate /HSN Codes, as ought to have been
correctly specified by the Bidders/ Suppliers to the Subject
Tender, this Hon'ble Court may also be pleased to declare
the opening of the Tender a nullity, and issued a Writ of
Mandamus, directing the Tendering Authority, i.e.,
Respondent No.1, to invite fresh bids with the HSN Code
duly specified;
iv.
writ order or direction in the nature of mandamus
commanding and directing the respondents disqualify those
Suppliers/Bidders who are not entering the correct HSN
Code/GST Rate specification and are, thus, paying a GST
of only 5%, as against the applicable rate of 18%."
THE CASE OF THE WRIT PETITIONER
6. The complaint of the Writ Petitioner can be noticed at this
stage as follows:
A reading of the Notice Inviting Tender (hereinafter referred to
as, the 'NIT'), would reveal that the bidders were directed to
specify the percentage of local content of the material being
offered, in accordance with the 'Make in India' Policy. In terms
of the said Policy, preference would be given to those projects,
which have at least 50 per cent local content ordinarily, such
purchase preference being limited to a margin of 20 per cent. The
sixth respondent in the writ petition (2nd Respondent in this appeal)
(L1) is a trader, importing the product from Walbar Corporation,
Mexico. It was contended that the tabulated statement of all the
financial bids, would show that the entities, which emerged as L1
to L3, had quoted their payment of GST at a rate of 5 per cent on
the base rate. The writ petitioner had quoted its GST rate as 18
per cent. The writ petitioner, in fact, had quoted its base price as
rupees seven lakh and three thousand. L1 had quoted its rate as
rupees six lakhs. There is a difference of just about 17.1 per cent
in the base price of L1 and the writ petitioner. But only on account
UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. &
ANOTHER [K. M. JOSEPH, J.]
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of the fact that L1 has shown the rate of GST at five per cent
whereas the writ petitioner has shown with GST liability at 18 per
cent,the total price of the writ petitioner became Rs. 8,29,540/-
whereas the total price of the L1 became Rs.6,30,000/-. On
account of this, a unilateral act of L1 in showing the GST rate at
5 per cent, generated a difference of about 31.6 per cent in the
total price quoted by L1 and the writ petitioner. It is the further
case of the writ petitioner that the GST rates of each product and
service have been duly clarified by the GST Council (for short,
'the Council'), using the HarmonisedSystem of Nomenclature (for
short, 'the HSN Code), in accordance with Chapter 84.It is the
case of the writ petitioner that the Council has declared in the
Code that as far as the product is concerned, the rate has been
shown as 18 per cent. The further case of the writ petitioner is
that, neither the NIT nor the bid documents,mention the relevant
HSN Code applicable to the product. It has sabotaged the
preservation of the level playing field. This is for the reason that
while the writ petitioner honestly revealed the correct GST rate,
L1 to L3 showed the GST rate at a far lower rate, viz., 5 per cent.
This has distorted the tendering process. Though the writ petitioner
had given, on earlier occasion, representation to the appellants
about earlier instances of such unfair practices, in the subject
NIT, no corrective steps were taken, thus, culminating in the writ
petitioner being relegated to the position of L4. It also had the
propensity to completely frustrate the 'Make in India' Policy and
deprive local manufacturers of the legitimate preference, it was
otherwise entitled.
7. The appellants joined issue and filed their pleadings opposing
the reliefs sought by the writ petitioner. Rejoinder and further affidavits
were filed. The High Court, in the impugned Judgment, found, inter
alia, as follows:
It refers to Clauses 2.7.6, 2.8.6.2, besides Clause 2.9.2 of the
Tender Document, which we shall advert to in detail. It was found
that there is no dispute that the writ petitioner is a local manufacturer
included in the list of Approved Vendors. It was further found that
the opening of the subject tender may not be possible as the offer
period had expired due to the interim order passed by the High
Court. Moreover, a subsequent tender in regard to the product
was granted to the writ petitioner.Prayer nos. 2 and 3 have become
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infructuous. However, thereafter the Court posed the question as
to whether there was any flaw in the procedure adopted by the
appellants. The dimension about the 'Make in India' Policy engaged
the attention of the Court. The case of the appellantsthat they are
not concerned with the GST rates and it was the responsibility of
the bidders to quote the HSN number and GST rate was found
not sound as the GST rate is integral to the tendering process.
Noting that a contract is a commercial transaction, it was found
that the Court cannot examine the detail of the terms of the
contract.The High Court articulated the limitations on the Court
exercising power of judicial review. Thereafter, the Court has
found that the Court can certainly examine as to whether the
decision-making process was reasonable, rational and not arbitrary.
Support was drawn from Judgment of this Court in Reliance
Energy Ltd. and another v. Maharashtra State Road
Development Corpn. Ltd. and others1. Thereafter, it was found
that the bid documents contemplated that the applicable GST has
to be deducted from the bid of the successful tenderer under the
reverse charge mechanism and the deposit of the same is to be
madewith the concerned Tax Authority. There will be disparity in
the total price offered on account of the difference in the GST
rate, thus, denying fair competition or level playing field. The
mentioning of the concerned HSN Code is necessary to determine
the GST rate, which is to be added to the base price to arrive at
the final price. Applying the said process, it was found that the
rate quoted by the writ petitioner was more than 20 per cent of
the rate quoted by L1 and also L2 and L3, on account of writ
petitioner quoting much higher rate, which was the correct rate,
whereas L1 to L3 did not quote the correct rate. It was further
found that, if the GST value is to be added in the base price, to
arrive at the total price, and it is used to determine the inter se
ranking in the selection process, it was the duty of the appellants
1 and 2 to clarify the HSN Code. It is further found that, mentioning
of the HSN Code in the tender document itself, will resolve 'all
disputes' relating to fairness and transparency, by providing a level
playing field in the true spirit of Article 19(1)(g) of the Constitution
of India. It is on this reasoning that the relief, as already noted,
was granted.
1 (2007) 8 SCC 1
UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. &
ANOTHER [K. M. JOSEPH, J.]
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SUPREME COURT REPORTS
[2022] 17 S.C.R.
8. We heard Shri N. Venkataraman, the learned Additional Solicitor
General (ASG), appearing on behalf of the appellant, Shri Amar Dave,
learned Counsel appearing on behalf of the writ petitioner and Shri Girdhar
Govind, learned Counsel, appearing on behalf of the second respondent.
9. Shri N. Venkataraman, learned ASG, would point out that the
High Court has issued a Mandamus. A Writ of Mandamus can be issued,
if there is a statutory duty. There is no statutory duty with the appellants
to do the things, which have been directed in the impugned Judgment.
He would further point out that a proper appreciation of the Clauses in
the bid document, would reveal the following:
The bidders, on the one hand, undoubtedly, are called upon to
declare the tax rate, as applicable (Clause 2.7.6). However, a
perusal of Clause 2.9.2 would reveal that, in case, the information
about the tax liability is not forthcoming in the bid, the bid will be
considered as inclusive,and any liability on account of such tax,
would be payable by the concerned bidder. It is further pointed
out that Clause 2.8.6.2 declared that the appellants will not be
responsible for payment of taxes and duties paid by the bidder on
a misclassification or misapprehension of law. In other words, the
contention of the appellants is that the terms of the bid contemplated
that it is expected of the bidders to bid the correct rate of tax. If
the rate of tax was expressed in the bid, then, the bid would be
evaluated on the consideration of the base price, after adding the
tax component. Should the bid of such a tenderer be selected, the
appellants would, necessarily, have to pay the price to the bidder
and absorb the tax also. On the other hand, in the case of a bidder,
who does not reveal the rate of tax separately and merely quotes
the base price, then, if he is selected, he would be entitled only to
the payment of the amount quoted. In other words, the duty to
pay the GST, being an indirect tax, is on the seller or supplier. He
would have to file the return and assess the tax on self-assessment
basis and pay the tax. This would equally be the position of the
tenderer, who may quote the rate, which may not be the correct
rate but a lesser rate. In both the cases last mentioned, viz., where
the tenderer does not include the tax component separately, or
includes it, but shows tax rate at a lower rate, the tax element
would have to be absorbed by the bidder. That is not the look out
of the appellants. The appellants are concerned only with selecting
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the lowest of the bidders, who is, no doubt, otherwise compliant
with the norms. The view taken by the High Court creates
considerable impediments, is unworkable and would lead to greater
problems. It also involves the appellants being obliged to seek
clarification regarding the HSN Code under the GST Act. There
are Authorities under the concerned taxing Statute, viz., the GST
Act, who are charged with the duty of assessing and collecting
the tax under the Act. The impugned Judgment casts the burden
to discharge duties, which are essentially to be shouldered by the
Taxing Authorities under the Taxing laws. While enviable advance
has been made by the Courts in entertaining application seeking
judicial review, even in contractual matters, the impugned Judgment
represents a case, where the High Court has erred and overstepped
its limits. He would submit that the judgments of this Court do not
support the impugned Judgment of the High Court. The impugned
judgment, in fact, runs counter to the law declared by this Court.
He would contend that an indirect tax is ordinarily capable of
being passed on. The liability, in the case of the indirect tax in
question, is on the seller (the bidders). This is a liability, which it
can, undoubtedly, pass on to the buyer under a contract but it may
instead absorb it. On a conspectus of the terms, it is, however,
clear that no liability is undertaken by the appellant to pay the tax
except as provided in the terms. The liability remains the
responsibility of the successful tenderer.
10. Shri Girdhar Govind, learned Counsel for the second respondent,
adopts the contentions of the learned ASG and he would contend that,
on facts, there is no occasion to pass the impugned Judgment. A short
counter affidavit is also filed in this Court.
11. Shri Amar Dave, learned Counsel appearing on behalf of the
Writ Petitioner, would address the following submissions:
He would support the impugned Judgment and he contends that
all that the High Court has directed, is that, there must be a level
playing field, in the matter of award of largesse by the State,an
inevitable result of applying Article 14. He would contend that the
crucial aspect is that when the appellants specifically contemplated
the addition of the tax liability to the base price for determining
the question as to who is to be the successful tenderer, then, it is
imperative that there should be clarity and certainty about the tax
UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. &
ANOTHER [K. M. JOSEPH, J.]
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SUPREME COURT REPORTS
[2022] 17 S.C.R.
rate and the HSN Code. This would produce actual equality of
treatment as between the tenderers. The facts of the case
exemplify a situation where tendering process becomes a mockery,
having regard to the wide disparity between the rate of tax quoted
by the writ petitioner and L1 to L3. A huge difference of 13 per
cent has completely impaired and derailed the fair bid of the writ
petitioner and, what is more, defeated the sublime object sought
to be achieved in the 'Make in India' Policy. He would emphasise
that what has been going on, before the High Court stepped in
with the impugned Judgment, was clearly an unfair trade practice.
The stand of the writ petitioner promotes the fundamental value
of honesty. A bidder, who does not disclose the correct rate of
tax, despite the injunction contained in Clause 2.7.6, will walk
away with a contract, having indulged in a completely unfair
practice. The implementation of the impugned Judgement would
result in the extinguishment of this wholly undesirable practice.
He would further contend that the appellants had, in fact, brought
out tender notices, implementing the direction of the High Court.
It is not something, which is incapable of being achieved. He next
drew our attention to the circumstance, that even the appellant
has purchased the product, showing the tax rate at 18 percent, as
is evident from the document dated 21.03.2017.He would further
contend that the Government of India, in the Ministry of Defence,
has been showing the correct HSN Code, thus, facilitating the
uniform disclosure of correct rate of tax for all the bidders. He
next relied on Circular dated 31.12.2018 issued by the Government
of India in the Ministry of Finance, Department of Revenue (Tax
Research Unit). Therein, he points out the following:
"12.3 Turbo charger is specifically classified under chapter
HS code 8414 80 30. It continues to remain classified under
this code irrespective of its use by Railways. Therefore, it is
clarified that the turbo charger is classified under heading 8414
and attracts 18% GST."
He would, therefore, contend that there is no impediment, in
law or on facts, for the appellants to comply with the impugned
Judgment. He next drew our attention to the Public Procurement
(Preference to 'Make in India') Order, 2017 dated 15.06.2017.
He emphasised the definition of the word 'local content':
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"'Local content' means the amount of value added in India
which shall, unless otherwise prescribed by the Nodal Ministry,
be the total value of the item procured (excluding net domestic
indirect taxes) minus the value of Imported content in the item
(including all customs duties) as a proportion of the total value,
in percent."
12. The learned Counsel for the writ petitioner would also seek to
support the direction of the High Court with reference to Section 168 of
the Goods and Services Act, 2017. This is apart from pointing out that
there is a provision for advance tax ruling contained in Section 96 of the
GST Tax. Therefore, it is not a case where the appellants can object to
the impugned direction, on the basis that there is no provision to 'seek
clarification'.
13. In the Rejoinder submission, the learned ASG would submit
as follows:
He would contend that it is the Assessing Officer, relevant to
the supplier of goods and not the Assessing Officer relevant to
the purchaser, who would have authority in the matter and this
adds to the woes of the appellantsif they are compelled to comply
with the impugned directions. As far as the Order dated 15.06.2017
is concerned, he would contest the version of the writ petitioner
based on the definition of the word 'local content' and would point
out that the maker of the Order, viz, the Government of India had,
in fact, contemplated excluding the net domestic taxes. As far as
the subsequent tenders issued is concerned, it is sought to be
justified with reference to the action of the appellants seeking to
comply with the impugned directions. He would contend that the
impugned directions are wholly impracticable and far from putting
an end to the disputes,it will only engender unending disputes.
14. Learned ASG would contend that the no reliance can be placed
on the publication in the Business Standard about tax invasion in the
Railways and the purport of the complaint can only be that if there is
evasion, the Tax Authorities must be awake to their duty and vigorously
pursue the evaders as per law.
ANALYSIS
SCOPE OF WRIT OF MANDAMUS
UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. &
ANOTHER [K. M. JOSEPH, J.]
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SUPREME COURT REPORTS
[2022] 17 S.C.R.
15. The learned ASG contended that the High Court erred in issuing
the direction, which is in the nature of the Writ of Mandamus. It is his
case that a Writ of Mandamus would lie only when a Statute imposes a
duty and there is failure in discharge of duty. We would think that this is
not a matter which is res integra. As early as inComptroller and Auditor
General of India, Gian Prakash, New Delhi and another v. K.S.
Jagannathan and another2 , a Bench of three learned Judges of this
Court had this to say:
"18. The first contention urged bylearned counsel for the appellants
was that the Division Bench of the High Court could not issue a
writ of mandamus to direct apublic authority to exercise its
discretion in a particular manner. There is a basic fallacy underlying
this submission-bothwith respect to the order of the Division
Bench and the purpose and scope of the writ of mandamus. The
High Court had not issued a writ of mandamus. A writ of
mandamus was the relief prayed for by the respondents in their
writ petition. What the Division Bench did was to issue directions
to theappellants in the exercise of its jurisdiction under Article 226
of the Constitution. Under Article 226 of the Constitution, every
High Court has the power to issue to any person or authority,
including in appropriate cases, any government,throughout the
territories in relation to which it exercises jurisdiction, directions,
orders, or writs including writs in the nature of habeas corpus,
mandamus, quo warranto and certiorari or any of them, for the
enforcement of the Fundamental Rights conferred by Part III of
the
Constitution
or
for
any
other
purpose.
In Dwarkanath v. ITO [AIR 1966 SC 81: (1965) 3 SCR 536, 540]
this Court pointed out that Article 226 is designedly couched in a
wide language in order not to confine the power conferred by it
only to the power to issue prerogative writs as understood in
England, such wide language being used to enable the High Courts
"to reach injustice wherever it is found" and "to mould the reliefs
to meet the peculiar and complicated requirements of this
country." In Hochtief Gammon v.