Gauhati High Court
Page No.# 1/ vs The State Of Assam And Ors on 17 February, 2025
Page No.# 1/10
GAHC010267122024
undefined
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WA/44/2025
M/S CHAYANIKA HANDLOOM PRODUCTS AND ANR
SOLE PROPRIETORSHIP CONCERN REPRESENTED BY ITS PROPRIETOR
SRI HRISHIKESH DEKA AND HAVING ITS REGISTERED OFFICE AT GOPAL
BAZAR, NALBARI, DIST. NALBARI, ASSAM, PIN- 781353.
2: HRISHIKESH DEKA
(SOLE PROPRIETOR) SON OF SRI DHIRENDRA NATH DEKA
R/O- GOPAL BAZAR
NALBARI DISTRICT
NALBARI
ASSAM
PIN- 781353
VERSUS
THE STATE OF ASSAM AND ORS
REPRESENTED BY THE SECRETARY TO THE DEPARTMENT OF
HANDLOOM, TEXTILES AND SERICULTURE, GOVT. OF ASSAM, DISPUR,
GHY-6, ASSAM
2:THE DIRECTOR OF HANDLOOM AND TEXTILES
ASSAM
GNB ROAD
AMBARI
GHY-781001
ASSAM
3:THE TENDER EVALUATION COMMITTEE
REPRESENTED BY THE DIRECTOR OF HANDLOOM AND TEXTILES
ASSAM
GNB ROAD
AMBARI
GHY-781001
ASSAM
Page No.# 2/10
4:M/S ARUNODOI UDYOG
KAIKARA
MANGALDAI
DIST. DARRANG
ASSAM
PIN- 784125.
5:M/S B.R. TEXTILES
DAKARGHAT BYE-PASS
DIST. NAGAON
ASSAM
PIN- 782003.
6:M/S BARUAH TIMBER DEPOT AND SUPPLIERS
KAIKARA
PATIDARRANG
MANGALDAI
DIST. DARRANG
ASSAM
PIN- 784125.
7:M/S JIMACHAYA INDUSTRIES
DAKHINGAON
KAHILIPARA
GUWAHATI
DIST. KAMRUP(M)
ASSAM
PIN- 781019.
8:M/S MAA SLEY HOUSE
CHAMATA
DIST. NALBARI
ASSAM
PIN- 781306.
9:M/S MANOJ BAH BET UDYOG
WARD NO. 12
HAJO ROAD
DIST. NALBARI
ASSAM
PIN- 781102.
10:M/S SIPINI BHANDAR
MUNICIPALITY MARKET
BARPETA ROAD
DIST. BARPETA
Page No.# 3/10
ASSAM
PIN- 781315.
11:M/S PALMARIAN ENTERPRISE
DERGAON TOWN
WARD NO. 2
DIST. GOLAGHAT
ASSAM
PIN- 785614.
12:M/S POPULAR FURNITURE AND WEAVING INDUSTRIES
NILBAGAN
DIST. HOJAI
ASSAM
PIN- 782445.
13:M/S RANU INDUSTRIES
RONGAJAN CHARIALI
KURUKA
MORONGI
DIST. GOLAGHAT
ASSAM
PIN- 785613
Advocate for the Petitioner : MR. M K CHOUDHURY, MR. B SHARMA,MR. D DAS
Advocate for the Respondent : SC, HANDLOOM AND TEXTILE, FOR CAVEATOR,MR D K
NATH
BEFORE
HONOURABLE THE CHIEF JUSTICE
HONOURABLE MR. JUSTICE N. UNNI KRISHNAN NAIR
ORDER
Date : 17.02.2025
(N. Unni Krishnan Nair. J)
1. The appellants, in the present Intra Court appeal have presented a
challenge to the Judgment and Order, dated 12.11.2024, passed by the learned
Single Judge in WP(C) No. 4258/2024, rejecting the prayer of the petitioner for
considering the bid as submitted by the appellant no. 1 firm in pursuance to a
Page No.# 4/10
NIT dated 11.01.2024 to be a valid bid.
2. The appellant No. 1 firm, in pursuance to a NIT dated 11.01.2024, issued
by the Director of Handloom & Textiles, Assam, for empanelment of
manufacturers and suppliers for supply of Handloom and Handloom Accessories
under the various schemes of the Government of India and Government of
Assam, implemented by the Directorate of Handloom and Textiles, Assam, had
submitted its bid. During the process of evaluation of the technical bids, as
received in pursuance to the said NIT dated 11.01.2024, including the bid
submitted by the appellant No. 1 firm, the Tender Committee in its meeting held
on 22.02.2024, had held that the bid so submitted by the appellant No. 1 firm
was not responsive on account of non-fulfillment of the requirements of Clause
13(h) of the NIT. Being aggrieved by the said decision of the Tender Committee,
the appellants approached the writ Court by way of instituting a writ petition
being WP(C) No. 4258/2024.
3. The learned Single Judge, on consideration the submissions of the learned
counsel appearing for the parties, as well as on perusal of the materials coming
on record, was pleased vide the Judgment and Order dated 12.11.2024, to
uphold the decision of the Tender Committee in disqualifying the technical bid of
the appellant No. 1 firm.
Being aggrieved, the appellants have instituted the present proceeding.
4. Mr. M. K. Choudhury, learned Senior Counsel appearing on behalf of the
appellants, by referring to the provisions of Clause 3(a), 3(b) has submitted that
the appellant No. 1 firm is a manufacturer and is also a Micro and Small
Enterprise (MSE's) having up-to-date Udyam Registration certificate. Mr.
Choudhury, has submitted that in view of the provisions of Clause 3(e) of the
tender conditions, granting exemption to the MSEs from having prior turnover
and experience in all public procurements, subject to meeting of quality and
Page No.# 5/10
technical specification, the appellant no. 1 firm would not be required to satisfy
the conditions of Clause 3(b) relating to Average Annual Financial Turnover for
the years 2020-21, 2021-22 and 2022-23, which was quantified at Rs. 50.00
lakhs. Accordingly, Mr. Choudhury, has submitted that the Income Tax Returns
being so required by the tendering authority for the purpose of satisfying itself
about the financial turnover of the intending bidder, the exemption as granted to
the MSEs like the appellant No. 1 firm, it not being required to satisfy the said
requirement of having a prior turnover, the non-submission of the ITR for one
year i.e., for the year 2022-23 would not be detrimental to the bid so submitted
by it, and accordingly, submits that the non-submission of the ITR by the
appellants firm for the year 2022-23, would not have the effect of rendering the
bid of the appellant no. 1 to be non-responsive.
5. The provisions of Clause 3(a), 3(b), 3(e) and Clause 13, 13(h) and 13(i) of
the NIT dated 11.01.2024, being relevant are extracted herein below:-
"3(a) Manufacturers/Suppliers should be a registered manufacturer of Handloom
and accessories or authorize supplier of the manufacturers of the relevant goods. The
bidder should state in what capacity he/she is participating in the bidding process as a
manufacturer/supplier. The bidders in case of Registered under MSME, he/she should
submit the up-to-date Udyam Registration certificate from the competent authority
and clearly mention that he/she is a manufacturer of Handloom & accessories.
3(b) The average annual financial turnovers during the last three years i.e. 2020-
21, 2021-22 & 2022-23 should not be less than Rs. 50.00 Lakhs. The audited/certified
balance sheet should be submitted along with IT return files for the years as stated
above.
3(e) Relaxation for Micro & Small Enterprises (MSES):
As per the Government Policy Circular No.1(2) (1) 2016-MA, dated 10/03/2016
Issued by O/o Development Commissioner (MSME), Ministry of Micro, Small &
Medium Enterprises, Government of India, Micro and Small Enterprises (MSEs) are
exempted from prior turnover and experience in all public procurements subject to
Page No.# 6/10
meeting of quality and technical specification. The bidders need to submit the up-to-
date copy of Certificate of registration for Micro or Small Enterprises (Udyam
Registration Certificate) issued by Ministry of Micro, Small and Medium Enterprises
(MSME), Govt. of India. Moreover, the bidders must be genuine manufacturer of
handlooms that clearly mention in the Udyam Registration Certificate. In case of
MSE payment of EMD and bid cost are exempted as per Govt. of India OM, No .F.No.
1(3)/2018-MA, Pt-III, dt.-27-10-2022.
(Schedule of Requirement)
(13) TECHINICAL BID (Part-I)
Following self-attested documents in hard copy and in online must be submitted in
technical bid, without these, the tender will be rejected.
13(h) Copy of Income Tax return and annual audited report (Balance Sheet &
Profit and Loss A/C of the last three financial years (i.e., 2020-21, 2021-22 & 2022-
23) duly certified by the Chartered Accountant.
13(i) Certificate from Registered Chartered Account/Statutory Auditor indicating
annual financial turnover during the last three years should be furnished with UDIN
No."
6. The learned Single Judge, on noticing the submissions so made before
him, had framed the following issue for consideration in the writ petition:-
"The issue to be decided is whether the documents required under Clause 13(h) would
come within the ambit of the "Average Annual Financial Turnover" provided as per
Clause 3(b) of the NIT and as such, whether Clause 3(e) would exempt the petitioners
from submitting the Income Tax Returns for 3 years, as required as per Clause 13(h)
of the NIT. The further question is whether the word "Turnover" and "Income Tax
Return" are different."
7. On considering the Clauses relevant for the purpose, existing in the NIT
dated 11.01.2024, the learned Single Judge, had proceeded to draw the
following conclusions:-
"14. On considering the above Clauses in the NIT, this Court finds that Annual
Page No.# 7/10
Turnover refers to the total revenue generated from the sale of goods or services
during a financial year before deducting any expenses, It is a measure of business
activity and operational performance. It is focused solely on the sales and revenue
generated in the normal course of business. It does not factor in expenses, taxes, or
other financial liabilities. Annual Turnover may be reported using different
accounting methods (cash or accrual basis) based on the company's accounting
policies, but it must be consistent with generally accepted accounting principles.
15. An Income Tax Return is a formal document filed with the tax authorities that
reports income, deductions, and taxes owed for a given financial year. It encompasses
various sources of income, including but not limited to turnover. An Income Tax
Return includes comprehensive financial details such as total income, allowable
deductions, tax credits, and the final tax liability. It may also reflect income from
investments or other non-operational sources. Income Tax Returns require adherence
to specific tax regulations and formats prescribed by the tax authorities, which may
include the inclusion of various forms and schedules.
16. The primary purpose of reporting Annual Turnover is to provide a clear
picture of a company's revenue-generating capacity. It is often a critical criterion for
assessing a bidder's financial strength in tender applications. An Income Tax Return
serves to comply with tax obligations and Inform the government about the taxpayer's
financial status, ensuring accurate taxation based on total income.
17. In the case of Commissioner of Income Tax-VII, New Delhi vs. Punjab
Stainless Steel Industries (Civil Appeal No.5592/2008), the Supreme Court has held
that the word "Turnover" would mean the total "Sales". In terms of the meaning
given by the institute of Chartered Accountants of India, wherein it has been held at
paragraph-25 as follows:
"25. So as to be more accurate about the word "turnover", one can either refer to
dictionaries or to materials which are published by bodies of Accountants. The
Institute of Chartered Accountants of India (hereinafter referred to as the 'ICAI') has
published some material under the head "Guidance Note on Tax Audit Under Section
44AB of the Income Tax Act". The said material has been published so as to guide the
members of the ICAI. In our opinion, when a recognized body of Accountants, after
due deliberation and consideration publishes certain material for its members, one
Page No.# 8/10
can rely upon the same. Para 5 of the said Note deals with "Sales", "turnover" and
"gross receipts". Paras 5.2 and 5.3 of the said Note are reproduced herein below,
which pertain to the term "turnover".
"5.2 In the "Guidance Note on Terms Used in Financial Statements" published by the
ICAI, the expression "Sales Turnover" (Item 15.01) has been defined as under:-
"The aggregate amount for which sales are effected or services rendered by an
enterprise. The term 'gross turnover' and net turnover' (or 'gross sales' and 'net sales)
are sometimes used to distinguish the sales aggregate before and after deduction of
returns and trade discounts".
5.3 The Guide to Company Audit issued by the ICAI in the year 1980, while discussing
"sales", stated as follows: "Total turnover, that is, the aggregate amount for which
sales are effected by the company, giving the amount of sales in respect of each class
of goods dealt with by the company and indicating the quantities of such sales for
each class separately.
Note (i) The term 'turnover" would mean the total sales after deducting therefrom
goods :eturned, price adjustments, trade discount and cancellation of bills for the
period of audit, if any. Adjustments which do not relate to turnover should not be
made e.g. writing off bad debts, royalty etc. Where excise duty is included in turnover,
the corresponding amount should be distinctly shown as a debit item in the profit and
loss account." (emphasis added)
The aforestated meaning given by the ICAI clearly denotes that in normal
accounting parlance the word "turnover" would mean "total sales" as explained
hereinabove. The said sales would definitely not include the scrap material which is
either to be deducted from the cost of raw material or is to be shown separately under
a different head. We do not see any reason for not accepting the meaning of the term
"turnover" given by a body of Accountants, which is having a statutory recognition."
18. A reading of Clause 3(b) shows that the bidder is to submit the Average
Annual Financial Turnover during the last 3 years, the audited/certified balance sheet
along with Income Tax Returns filed for the said 3 years. The above Clause 3(b)
shows that besides the Average Annual Financial Turnover, the income tax returns
are also to be submitted along with the audited/certified balance sheet. Clause 3(e) of
the NIT provides for the exemption of submitting turnover and experience, as
Page No.# 9/10
required under Clause 3(b) and 3(c) of the NIT respectively, for Micro Small
Enterprises (MSEs). Clause 3(e) in the opinion of this Court, does not exempt the
petitioners from filing Income Tax Returns, inasmuch as, Clause 3(b) clearly provides
that the Average Annual Financial Turnover for three years would have to be
provided. The audited/certified balance sheet, along with the Income Tax Returns was
also to be provided. This shows that the Average Annual Financial Turnover is
different from an Income Tax Return.
19. Due to the reasons stated above, this Court is of the view that the Average
Annual Financial Turnover would have to be considered to be different than an
Income Tax Return and the exemption given under Clause 3(e) to MSEs, from
submitting the "Average Annual Financial Turnover" in Clause 3(b) does not include
within its ambit Clause 13(h) of the NIT. There is also no provision for submission of
the "Average" income tax returns for the last 3 years in either Clause 3(b) or Clause
3(h). Though the Income Tax Return can be supportive of the Average Annual
Financial Turnover, the Average Annual Financial Turnover cannot be said to be the
same as an Income Tax Return or vice versa."
8. The learned Single Judge, thereafter, by referring to the decisions of the
Hon'ble Supreme Court, as noticed in the Judgment, wherein, it has been
stipulated that the author of the tender document is the best person to
understand and appreciate its requirement and interpret the documents and
that there has to be minimal interference by the Courts in relation to the terms
and conditions of a tender, proceeded to draw the following conclusions:-
"23. The above being said, as an Income Tax Return cannot said to be an Average
Annual Financial Turnover document, this Court holds that the relaxation provided
to MSEs under Clause 3(e) would not cover the Income Tax Returns required to be
submitted by a bidder under Clause 13(h). As the petitioners have submitted only the
Income Tax Returns for 2 years, which is not in consonance with the requirement of
filing the Income Tax Returns for 3 years, this Court does not find any infirmity with
the decision of the respondent authorities in disqualifying the petitioners Technical
Page No.# 10/10
Bid."
9. On a close perusal of the conclusions by the learned Single Judge in the
matter and as extracted herein above, we are of the considered view that the
same are well reasoned and are supported by the materials brought on record.
We would like to add that given the language in which Clause 13 is so couched,
it is clear that in the event the intending bidder had not submitted the
documents so mentioned in Clause 13(a) to Clause 13(q), the bids so submitted
would be liable to be rejected. The appellant No. 1 firm, herein, admittedly,
along with its bids having not brought on record the ITR for the years 2022-23,
a violation of the provisions of Clause 13(h) had occasioned and accordingly, in
view of the stipulations so contained in Clause 13, the bid of the appellant No. 1
firm is to be held to be non-responsive.
10. In view of the discussions reached herein above, we are not persuaded to
take a different view in the matter other than that is so taken by the learned
Single Judge in the Judgment and Order dated 12.11.2024; and accordingly, we
are of the considered view that the present writ appeal is bereft of any merit
and consequently, the same stands dismissed, however, without any order as to
costs.
JUDGE JUDGE
Comparing Assistant
