The Allahabad High Court in the case of Bharat Forge Limited v. The Principal Chief Materials Manager Diesel Locomotive Works And 7 Others held that GST rate or HSN Code is integral to the process of selection of tenderer to provide level playing field.
“For any issue relating to the applicability of correct HSN Code or GST rate, it would then be the duty of respondent nos.1 and 2 to seek clarification from the GST authorities. The respondent nos.1 and 2 cannot get away by saying that they are not required to mention the GST rate or HSN Code in the tender document, as it is integral to the process of selection of tenderer, more so, in view of the admission of the respondent no.1 in the counter affidavit that the offers have to be evaluated based on the GST rates as quoted by each bidder and same will be used to determine the inter se ranking.”
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The above decision has laid down by the Division Bench of Allahabad High Court Comprised of Justice Sunita Agarwal and Justice Jaylan Banerji while dealing with the petition filed by Bharat Forge Limited for the issuance of writ order or direction in the nature of mandamus commanding and directing the Principal Chief Materials Manager Diesel Locomotive Works And 7 Others to clarify that the Procurement Product must be taxed @ 18% under the Relevant HSN Code to ensure a Uniform Bidding from the parties, and also to ensure a level playing field for all Bidders/Supplies.
It is contended by the petitioner that circular issued by the Railway Board and the tender document indicates that the bidders, including the petitioner herein were required to specify the percentage of local content in the material being offered in accordance with the Make in India Policy.
It is further contended by the Petitioner that the GST rates of the products and services have been duly clarified/fixed by the Goods and Services Tax Council, using the Harmonized System of Nomenclature (HSN) Codes for each product/service, to specify the rates at which GST would be applicable.
It is pointed out that neither the NIT (Notice inviting tender) nor the tender document published by respondent no.1 mentioned the relevant HSN code applicable to the procurement product.
The petitioner has also submitted that that the petitioner had previously also raised the issue regarding non-incorporation of the relevant HSN Code in the tender document before the tendering authority. In response, none of the bidders, except the petitioner herein had attached the Local Content Certificate to avail of the purchase preference for locally manufactured goods under the Make in India policy. Having failed to get a proper response from the respondents, the petitioner has approached this Court in the present writ petition.
The court has observed that it shall be the responsibility of the tenderers/bidders to quote correct HSN number and its corresponding GST rate. The purchaser/tendering authority shall not be responsible for the misclassification of HSN number or incorrect GST rate, if quoted by the bidder/tenderer. All the tenderers/bidders have to ensure that they are GST compliant and quote tax structure/rates as per GST law and for this reason HSN code was not mentioned in the NIT (Notice Inviting Tender) and bid document.
The bench has said that,
“Mentioning of HSN Code in the tender document itself shall 17 resolve all disputes relating to fairness and transparency in the process of selection of bidder, by providing level playing field to all bidders/tenderers in the true spirit of Article 19(1)(g) of the Constitution of India.”
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Case details
Case :- WRIT - C No. - 17620 of 2019
Petitioner :- Bharat Forge Limited
Respondent :- The Principal Chief Materials Manager Diesel Locomotive Works And 7 Others
Counsel for Petitioner :- Prashant Shukla, Anurag Khanna (Senior Advocate)
Counsel for Respondent :- Rishi Kumar, Rajnish Kumar Rai, Udayan Nandan
Bench: Justice Sunita Agarwal and Justice Jaylan Banerji
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