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

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A 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, we have also noticed, B 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. We have already found that Circular C dated 05.09.2017, issued by the Board, does not provide for the mandatory duty to specify the HSN Code. OTHER TENDERS BROUGHT OUT BY OTHER UNITS OF THE RAILWAYS CONTAINING THE HSN CODE

58Copy pinpoint58. In this regard it is contended by the appellants that as far as the tenders relied upon by the writ petitioner produced in the counter affidavit as having been brought out wherein the HSN code is indicated, they are tenders issued by the other units of the Indian Railways. Since the first appellant is the Union of India, we would expect that if it is otherwise permissible to sustain the impugned judgment, it may not be fair to not have a uniform policy in the matter of award of largesse by the various units under it. However, the appellants do point out that even in the tenders which have been brought out, the HSN Code mentioned in the tender is shown as indicative only. It has been provided in the tenders relied upon by the writ petitioner that it will be the responsibility of the bidder to quote the correct HSN Code and the corresponding GST rate while submitting the offer. We may notice the relevant clause: “A.1. HSN number mentioned in tender 8504 is indicative only. It will be responsibility of the bidders to quote correct HSN number and corresponding GST rate while submitting offer. 2. Even if bidders quote different GST rates in offers, the offers shall be evaluated by IREP3 system based on the GST rate as quoted by each bidder and same will be used for determining the interse ranking. Bidders may note that I. It shall be the responsibility of the bidder to ensure that they quote correct GST code and HSNnumber. II. Purchaser shall not be responsible for any misclassification of HSN number or incorrect GST rate if quoted

UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. & 1055 ANOTHER [K. M. JOSEPH, J.]

by the bidder. III. Wherever the successful bidder invoices the goods GST rate of HSN number which is different from that incorporated in the purchase order, payment shall be made as per GST rate which is lower of the GST rate incorporated in the purchase order or billed. IV. Any amendment to GST rate or HSN number in the contract shall be as per the contractual conditions and statutory amendments in the quoted GST rate and HSN number, under SVC. B. Are you eligible for availing benefits and preferential treatment extended to Micro and Small Enterprises (MSEs). If so, the necessary documents as per special conditions for MSEs for claiming benefits and preferential treatment extended to MSEs to be attached. C. In case the successful tenderer is not liable to be registered under CGST/ IGST/ UTGST/ SGST Act, the railway shall deduct the applicable GST from his/their bills under Reverse Charge Mechanism (RCM) and deposit the same to the concerned tax authority. D. Performance statement of orders received and supplies made for last three years for subject item is must for all tenderers including approved sources.”

59Copy pinpoint59. Having regard to the terms, we cannot cull out a public duty to provide for the correct HSN code.Therefore, we cannot support the impugned judgment based on the issuance of tenders as contended. REVERSE CHARGE MECHANISM E

60Copy pinpoint60. We have noticed that the 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, we 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. We 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 H

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A 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, we notice from the tender condition relied upon by the writ petitioner which we 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 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.

61Copy pinpoint61. The upshot of the above discussion is that, we find that the appellants have made out a clear case for our interference with the impugned Judgment. There remains, however, one aspect. It is the case of the appellants 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, we would 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. Towards this end, the

UNION OF INDIA & OTHERS v. BHARAT FORGE LTD. & 1057 ANOTHER [K. M. JOSEPH, J.]

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.

62Copy pinpoint62. The appeal is allowed, impugned judgment is set aside and we further direct that the appellants will comply with the directions given in paragraph-61 of this Judgment. There is no order as to costs.

Ankit Gyan and Anurag Bhaskar Appeal allowed. (Assisted by : Priyanshu Agarwal, LCRA)