Bharat Forge Ltd Vs Diesel Locomotive Works

GST - Respondent no.1, Diesel Locomotive Works, Varanasi published a notice dated 11.4.2019 inviting e-tender for procurement of Turbo Wheel Impeller Balance Assembly to D.L.W Part no.16080385 - It is contended that the petitioner who is the only local manufacturer of the procurement product has been unfairly and unjustly prevented from availing the benefit and the preference under the Make in India policy - The product offered by the petitioner in the subject tender being 97.68% indigenously developed has been recognized by the respondent nos.1 and 2, which has led to inclusion of the petitioner herein to the 'approved vendor list' prepared by the respondent nos.1 and 3 - It is submitted that the respondent no.1, the tendering authority has the responsibility to provide a level-playing field of all bidders/tenderers by mentioning the HSN Code for the procurement product so that all tenderers/bidders would have quoted a uniform GST rate - The denial to discharge the said responsibility by respondent no.1 has lead to unfair trade practices, inasmuch as the tenderers took unfair advantage by quoting a GST rate which is substantially lower than the applicable GST rate – Petitioner contends that accepting bids of those who do not quote the correct GST price is contrary to the public interest, in as much as, it gives licence to the tendering authority to act in favour of a particular bidder – Petitioner, therefore, submits that a writ of mandamus be issued directing the tendering authority to indicate the HSN Code of the procurement product, i.e. 'Turbo Wheel Impeller Balance Assembly' in the tender document itself as per GST Tariff in Chapter 84 as HSN Code no.84148030, to ensure a uniform bid from the tenderers and balance to provide a level-playing field to all bidders/tenderers, by including uniform GST rates in the base price.

Held:

+ Only dispute remains is about the flaw, if any, in the procedure adopted by the Railways in the tendering process. The petitioner is aggrieved by the fact that after opening of the financial bids, the ranking of bidders was done on the total price (all-inclusive price), which was arrived at by adding base price and GST rate (GST value).

+ The bidders selected as L-1, L-2 and L-3 had quoted GST @ 5%, whereas the petitioner quoted 18% GST rate, which has resulted in increase in the margin of purchase preference for more than 20%. The petitioner could get benefit of Make in India Policy being the local manufacturer, only if the margin of purchase preference was less than or up to 20%.

+ The respondent Railways had arranged ranking of the tenderers/bidders on the total offered price which figure was arrived by adding GST value in the base price. The explanation/stand of respondent no.1 that they are not concerned with GST rates as it is the area of concern of GST authorities and it was the responsibility of the bidders to quote HSN number and corresponding GST rates, is not sound, inasmuch as, GST value (GST rate) is integral to the tendering process.

+ In the matter of award of contract, scope of judicial review is limited. The parameters for interference would be arbitrariness, irrationality, unreasonableness, bias and malafide. The purpose is to check whether choice or decision is made lawfully and not to check whether choice or decision is "sound". The reason being a contract is a commercial transaction; evaluating tenders and awarding contracts are essentially commercial functions.

+ If the decision relating to award of contract is bonafide, the Court in exercise of the powers of judicial review will not interfere, even if a procedural aberration or error in assessment or prejudice to a tenderer is made out.

+ The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damage in the Civil Court.

+ Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical or procedural violation or some prejudice to self and persuade Courts to interfere by exercising power of judicial review should be resisted. The reason being that such interferences may be interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold.

+ The Court cannot examine the details of the terms of the contract which has been entered into by the public bodies or the State. The Courts have inherent limitations on the scope of any such enquiry. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then the Court, cannot act as an appellate Court by substituting its opinion in respect of selection made for entering into such contract.

+ But, at the same time, the Courts can certainly examine whether "decision making process" was reasonable, rational, not arbitrary and violative of Article 14.

+ On analysis of the facts and circumstances of the instant case, one of the points which arises for consideration is whether the classification of HSN Code is integral to the tendering process, i.e., whether it has an impact on the selection of tenderers or the choice of tenderers while ranking them after opening the financial bids.

+ It is admitted to the respondent no.1 and it was clarified in the bid document that the applicable GST has to be deducted from the bills of the successful tenderer under reverse charge mechanism and the deposit of the same is to be made to the concerned tax authority. The 'Statutory Variation clause' as a 'disclaimer clause' has been mentioned in the tender document with the obligation on every tenderer to mention the correct rate of tax in the tender document.

+ It is argued on behalf of the respondent no.1 that the Railways is not concerned with the misclassification of HSN Code or GST rate, if quoted by the tenderer. The contention of respondent no.1 is that the tenderer would be required to adjust the basic price to the extent required by higher tax billed as per invoices to match the all-inclusive price as mentioned in the purchase order.

+ The said stand will not change the position at the stage of selection, inasmuch as, there will be disparity in the total price offered on account of difference in the GST rates quoted by each bidder.

+ The fair competition or 'level playing field', would, therefore, be denied to each bidder as someone may bag the tender by quoting lesser rate of GST (lesser GST value), which may result in substantial difference in the total price offered by bidders/tenderers.

+ The HSN code (Harmonized System of Nomenclature) is provided for each product/service by GST Council to specify the rate at which GST would be applicable. The suppliers have to quote HSN Code of the product to be supplied by them in the tender document, itself. The mentioning of correct HSN Code is necessary to determine the GST rate (GST value) which is to be added in the base price to arrive at the final price offered by the bidder/tenderer.

+ In the case at hand, though the respondent no.6 was ranked as L-1 and the petitioner herein as L-4, but the margin of purchase preference between respondent no.6 (L-1) and petitioner (L-4) became more than 20% on account of mentioning of GST rate at 5% by the respondent no.6 (L-1), which is according to HSN Code of the product in Chapter 86 of GST Tariff.

+ The petitioner herein claims that the correct GST rate should be 18% and the HSN Code which falls under Chapter 84 of GST Tariff would be applicable. Whereas the respondent no.1, Railways in the counter affidavit filed by them did not clarify the correct HSN Code or GST rate of the product and is trying to shift its responsibility by saying that the levy of tax and imposition of penalty for mis-classification of HSN Code is an area of concern of the tax authorities.

+ Above explanation of railways is not satisfactory, inasmuch as, selection of bidder is made by inclusion of GST value in the base price. In the situation of any confusion regarding the applicability of correct HSN Code, the Railways ought to have sought clarification from the GST authorities about the correct HSN Code applicable to the procurement product.

+ The respondent no.6 has also stated in its counter affidavit that the respondent no.2 should be instructed by this Court to come on record to state the GST rate and correct HSN Code in order to resolve all the controversies raised in the writ petition.

+ It is categorically stated in the counter affidavit of respondent no.6 that it is imperative for the respondent no.2 to come on record to confirm the HSN Code and GST rates which would clear all doubts once and for all with respect to the goods in question.

+ In our considered opinion, if the GST value is to be added in the base price to arrive at the total price of offer for the procurement product in a tender, and is used to determine the inter se ranking in the selection process, it is incumbent on the part of the respondent nos.1 and 2 to clarify the HSN Code, i.e. to clear their stand with regard to the applicable GST rate and HSN Code of the "procurement product".

+ Thus, the mentioning of HSN Code in the tender document itself shall 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.

+ 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.

+ Bench, therefore, finds 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 inter se 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'.

+ With the above observations and directions, the writ petition is disposed of.

- Petition disposed of: ALLAHABAD HIGH COURT

2020-TIOL-84-NAA-GST

2020-TIOL-83-NAA-GST

2020-TIOL-2201-HC-MAD-VAT

Sri Meenakshi Traders Vs CCT

Whether it is fit case for remand where revision of assessment is commenced by the Revenue, without considering the assessee's objections to the SCN proposing to initiate such proceedings & without giving opportunity of personal hearing - YES: HC

- Assessee's writ petitions allowed :MADRAS HIGH COURT

2020-TIOL-2200-HC-MAD-VAT

Videocon Industries Ltd Vs DCCT

In writ, the High Court finds that the assessee did not put forth any acceptable explanation for not resorting to alternative remedy provided under the statute. Hence the court does not express any view on the correctness or otherwise on the merits of the controversy involved in this case.

- Writ petition disposed of :MADRAS HIGH COURT

2020-TIOL-2208-HC-MAD-CX

Herrenknecht India Pvt Ltd Vs ACGST & CE

CX - Petitioner is in the second round of litigation and seeks a mandamus directing the Assistant Commissioner to consider representation dated 19.12.2019 and subsequent reminders seeking payment of interest on the rebate sanctioned beyond the period of three months from date of filing of claim as per Section 11BB of the Central Excise Act, 1944.

Held: Ratio of the judgment of the Supreme Court in the case of Ranbaxy Laboratories Ltd. (2011-TIOL-105-SC-CX) is applicable on all fours to the present matter - As the representation of petitioner dated 19.12.2019 seeking interest is still pending, it would suffice that the respondent be directed to consider the aforesaid representation in light of the judgment of the Supreme Court in the case of Ranbaxy Laboratories (supra) within a period of eight (8) weeks – Petition disposed of: High Court [para 7]

- Petition disposed of: MADRAS HIGH COURT

2020-TIOL-2207-HC-KAR-CUS

A Dasnivas Fernando Vs CCE & ST

Cus - Appellant received the order-in-original on 12.02.2016 (imposing penalty of Rs.36,00,000/-) and filed an appeal before the Tribunal after depositing an amount of Rs.2,00,000/- as pre-deposit along with the application for condonation of delay on 05.08.2017 - The Tribunal, by an order dated 06.12.2017 rejected the application of the appellant on the ground that the same is barred by limitation and no sufficient cause for condonation of delay of 455 days in filing the appeal is made out - Aggrieved, the assessee has filed the present appeal before the High Court

Held: It is well settled in law that the expression 'sufficient cause' should receive liberal consideration so as to advance the cause of justice and the same should not be used as a penal statute to punish the erring parties - In the application for condonation of delay, the appellant had stated that on account of the financial difficulty, he could not arrange the amount and the delay had caused - Taking into consideration that the expression 'sufficient cause' should receive liberal consideration so as to advance the cause of justice, the substantial question of law framed in this appeal is answered in favour of the assessee and against the revenue - CESTAT order dated 06.12.2017 is hereby quashed and the matter is remitted to the Tribunal for decision on merits after affording an opportunity to the parties - Appeal disposed of: High Court [para 6, 7]

- Appeal disposed of: KARNATAKA HIGH COURT

2020-TIOL-1701-CESTAT-MUM

Raheja Regency Cooperative Housing Society Ltd Vs CGST & CE

ST -  Rejection of refund claim on Service Tax paid under protest on contribution received from members of a co-operative housing society is assailed in this appeal.

Held: From the case records it is apparent that the appellant was not even issued with a show-cause notice before rejection of such refund claim, for which appellant also raised the issue of violation of principles of natural justice as a ground for setting aside the Order- in-Original before Commissioner (Appeals) - Compliance of such a requirement would have enabled the appellant to establish per head contribution of members to RWA and if such constitution is non-profit in nature - Bench finds this as a fit case that requires to be re-adjudicated by the Commissioner (Appeals) who is equally empowered under Section 35A(3) of the CEA, 1944, applicable to Service Tax matters too, to make an inquiry himself and arrive at a finding - Order set aside and matter remanded: CESTAT [para 5, 6]

- Matter remanded: MUMBAI CESTAT

2020-TIOL-1700-CESTAT-KOL

Jai Balaji Industries Ltd Vs CCGST & CE

CX -  The appellants are alleged to have availed Cenvat Credit in respect of LAM (Low Ash Metallurgical) COKE, an input, for the year 2011-12 and 2012-13 on the basis of fake invoices issued by Central Excise Registered dealer without supply of goods - This allegation is based on investigations done by department from Municipal Corporation as well as Postal Department that no such godown/premises in the name of M/s Dankuni Steel Ltd existed at the declared address - As regards the letter from Postal authorities, the same cannot be considered as conclusive proof of existence, or otherwise, of any postal address as, admittedly, the enquiries were conducted nearly one and a half years after the issue of invoice by the dealer - The best evidence would have been for departmental officers to physically visit the place and draw a panchnama after making enquiries from the locality - No such documentary evidence is there on record - The department has not denied that the dealer, M/s Dankuni Steel Ltd was registered with jurisdictional Central Excise formation - As per extant departmental instructions, the premises were required to be physically inspected within 5 days of granting registration - It has to be presumed that these instructions were duly followed - In that case, it has to be assumed that during the relevant period, the dealer was operating from registered premises - The dealer has clarified that their head office was at Bentinck Street and this was duly indicated in all disputed invoices - The department has not denied the existence of the dealer at Bentinck Street address - Hence, the material available on record can at most arose suspicion, but suspicion, however strong, cannot replace proof/evidence - The department has made no enquiries to ascertain whether the disputed quantity of LAM Coke had been received in appellant's factory - A proper stock-taking would have revealed the true picture - But no such evidence is there - Hence, it has to be accepted that the disputed quantity of LAM Coke was actually received in the factory - The department did not also make any enquiry to determine whether the quantity of finished goods manufactured by assessee was consistent with the consumption of disputed quantity of inputs - It has to be presumed that the disputed quantity of LAM Coke was duly received in appellant's factory and used in manufacture of finished goods - The appellants had provided the Railway Receipts (RR's) under cover of which the inputs had come - The disputed invoices have cross references of corresponding RR's - The department made no efforts to verify the genuineness of the RR's - Hence, it cannot be said that the invoices received in appellants' factory were not accompanied by duty paid goods - It is now established law that the mere non-existence of a dealer at registered premises will not disentitle the recipient from availing cenvat credit - In respect of same appellants, a Bench of this Court in  2019-TIOL-3842-CESTAT-KOL  relying on the decision of Allahabad High Court in case of  2014-TIOL-2693-HC-ALL-CX  - It is also established law now that duty paid goods can be consigned directly to a buyer by manufacturer/supplier without goods first going to dealer's premises  -  Once it is held that the disputed quantity of goods have been duly received in appellant's factory, the cenvat credit on input service of transportation cannot also be denied - The department has not been able to make out a case for denial of Cenvat Credit: CESTAT

- Appeals allowed: KOLKATA CESTAT

2020-TIOL-1699-CESTAT-KOL

Marcus Oils & Chemicals Pvt Ltd Vs CC

Cus - The appellant have imported certain raw materials (impure Wax) and equipment from their US-based parent company - The case was forwarded to SVB for detailed investigations who issued a detailed Questionnaire and a Circular 04/2003 to the effect that pending investigation, all goods imported by appellant be provisionally assessed with PD Bond and 1% EDD (Extra Duty Deposit); appellant responded to the Questionnaire; another SVB Circular 06/2006 was issued enhancing the EDD to 5% - Appellants submitted documents such as copies of Invoices and bills of Entry - SVB sought the appellant to submit certain "test" values to support the declared transaction value of imported capital goods - SVB passed the order and rejected appellant's declared transaction value; loaded the value of raw materials by 100% to 290%, after allowing quantity discount of 10%; loaded 10% on capital goods towards technology-related modifications - The gist of submissions by appellants are that the department did not consider their submissions in entirety - The reasons for referring the case for SVB and re-determination of declared values is not spelt out; the department conveniently ignored the data submitted by appellants justifying the value adopted by them - Department has relied upon the international chemical report without actually seeing whether the items mentioned therein and the items imported are comparable in quality as well as quantity and that no test report has been obtained - The original authority has given a finding that party has not submitted any test report with facilitations of imported goods to judge their claim that the wax imported by them is full of impurities and not refined - At the same time, department has also not got the goods tested - Besides, there is nothing on record to differentiate between LDPE wax and PE wax - Even the importer has not differentiated while submitting the chemical weekly data for comparative analysis - Tribunal have no other option but to accept the minimum transaction value of polyethylene wax of the contemporaneous period available in chemical weekly report in terms of Rule 5(3) of CVR, 1988 - The original authority has erred to the extent that though he finds that in comparison to weekly reports, the quantities imported by appellants are huge - Yet, he proceeds to compensate the same by 10% quantity discount - This has no legal basis - First up all, it was incumbent on the department to show as to how the relation between appellants and their overseas sellers has affected the prices - Thereafter, submissions of appellants were required to be considered and reasons, if any, for rejecting the same should have been recorded - No discussion and findings have been given by both the authorities on Annexures submitted by appellants - The appellants have taken inordinate time to submit reply to questionnaire given by Revenue to them in 2003 - Department has also not adhered to the time frame given vide CBEC circular 11/2001 - In the end, there was rush to complete the proceedings - Appellants submits that no clarification whatsoever was sought from them as to the relevance (or otherwise) of the Chemical Weekly Report before proceeding to rely on the Report - No opportunity of hearing in this regard was given to appellants - The submissions of appellant have not been considered - The case needs to go back to original authority for a proper examination of all the facts of the case, the submissions of appellants including case law in this regard and to pass a speaking and reasoned order as per law - Appellants are directed to submit all the evidence they wish to rely upon to the original authority within four weeks: CESTAT

- Matter remanded: KOLKATA CESTAT