Kerala High Court
Ekk Infrastructure Limited vs Kerala State Transport Project, ... on 26 July, 2023
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN
WEDNESDAY, THE 26TH DAY OF JULY 2023 / 4TH SRAVANA, 1945
WP(C) NO.12471 OF 2021
PETITIONER :-
EKK INFRASTRUCTURE LIMITED
CORPORATE OFFICE AT IIND FLOOR, MUNICIPAL BUILDING,
AM ROAD, PERUMBAVOOR - 683 542,
REPRESENTED BY ITS AUTHORIZED SIGNATORY,
MR.PIUS ANTONY, AGED 55 YEARS, S/O.VARGHESE ANTONY.
BY ADVS.
DEEPU THANKAN
UMMUL FIDA
LAKSHMI SREEDHAR
RESPONDENTS :-
1 KERALA STATE TRANSPORT PROJECT, (KSTP)
PROJECT MANAGEMENT TEAM, T.C.N.11/339,
SREE BALA BUILDING, KESTON ROAD, NANTHANCODE,
KOWDIAR P.O., THIRUVANANTHAPURAM - 695 003,
REPRESENTED BY ITS PROJECT DIRECTOR.
2 PROJECT DIRECTOR
KERALA STATE TRANSPORT PROJECT, (KSTP),
PROJECT MANAGEMENT TEAM, T.C.N.11/339,
SREEBALA BUILDING, KESTON ROAD, NANTHANCODE,
KOWDIAR P.O., THIRUVANANTHAPURAM - 695 003.
3 CHIEF ENGINEER
KERALA STATE TRANSPORT PROJECT, (KSTP),
T.C.N.11/339, SREEBALA BUILDING, KESTON ROAD,
NANTHANCODE, KOWDIAR P. O.,
THIRUVANANTHAPURAM - 695 003.
BY SRI.APPU.P.S, GP
BY SRI.K.V.MANOJ
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 19.6.2023 ALONG WITH WP(C).12454/2021, THE COURT ON
26.7.2023 DELIVERED THE FOLLOWING:
WP(C) Nos.12471 & 12454 OF 2021
-: 2 :-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN
WEDNESDAY, THE 26TH DAY OF JULY 2023 / 4TH SRAVANA, 1945
WP(C) NO.12454 OF 2021
PETITIONER :-
EKK INFRASTRUCTURE LTD.
CORPORATE OFFICE AT IIND FLOOR, MUNICIPAL BUILDING,
AM ROAD, PERUMBAVOOR - 683 542,
REPRESENTED BY ITS AUTHORIZED SIGNATORY
MR.PIUS ANTONY, AGED 55 YEARS, S/O.VARGHESE ANTONY.
BY ADVS.
DEEPU THANKAN
UMMUL FIDA
LAKSHMI SREEDHAR
RESPONDENTS :-
1 KERALA STATE TRANSPORT PROJECT, (KSTP),
PROJECT MANAGEMENT TEAM, T.C. N.11/339,
SRE BALA BUILDING, KESTON ROAD, NANTHANCODE,
KOWDIAR P.O, THIRUVANANTHAPURAM - 695 003,
REPRESENTED BY ITS PROJECT DIRECTOR.
2 PROJECT DIRECTOR
KERALA STATE TRANSPORT PORJECT (KSTP),
PORJECT MANAGEMENT TEAM, T.C.N. 11/339,
SREEBALA BUILDING, KESTON ROAD, NANTHANCODE,
KOWDIAR P.O, THIRUVANANTHAPURAM - 695 003.
3 CHIEF ENGINEER,
KERALA STATE TRANSPORT PORJECT (KSTP),
T.C.N.11/339, SREEBALA BUILDING, KESTON ROAD,
NANTHANCODE, KOWDIAR P.O,
THIRUVANANTHAPURAM - 695 003.
BY SRI.K.V.MANOJ
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 19.6.2023, ALONG WITH WP(C).12471/2021, THE COURT ON
26.7.2023 DELIVERED THE FOLLOWING:
WP(C) Nos.12471 & 12454 OF 2021
-: 3 :-
JUDGMENT
[W.P.(C) Nos.12471 & 12454 of 2021]
Dated this the 26th day of July, 2023
These writ petitions are filed challenging the action of the
respondents in requiring the petitioner to pay GST in respect of the
works contract awarded to the petitioner. W.P.(C) No.12471/2021
is in respect of the work of upgradation of Painavu - Thannikandom
- Ashoka Kavala road (Km 0+000 to Km 21+000) and W.P.(C)
No.12454/2021 is in respect of BC Overlay of Adoor to
Chengannoor (Part of SH-1) Km + 93 + 400 (Adoor) to Km 117 +
200 (Chengannoor). The orders under challenge in W.P.(C)
No.12471/2021 are Exts.P8, P11 and P13 and the order under
challenge in W.P.(C) No.12454/2021 is Ext.P9.
2. Heard the learned counsel for the petitioner and the
learned Standing Counsel appearing for the respondents.
3. It is submitted by the learned counsel for the petitioner
that the petitioner is a limited company engaged in the business of
construction and that the Kerala State Transport Project (for short,
'the KSTP') is a special purpose agent set up by the Government of
Kerala for the purpose of road development utilising funds from the
World Bank in the State. It is submitted that the KSTP invited
tenders under the Kerala Rebuild initiative funded by the World
WP(C) Nos.12471 & 12454 OF 2021
Bank. The bids were for upgradation of Painavu - Thannikandom -
Ashoka Kavala road (Km 0+000 to Km 21+000) and BC Overlay of
Adoor to Chengannoor (Part of SH-1) Km + 93 + 400 (Adoor) to Km
117 + 200 (Chengannoor) having contract values of Rs.95.40 Crores
and Rs.98.10 Crores respectively. It is submitted that as the
petitioner was the lowest tenderer, the works were awarded to it by
the 1st respondent as per Ext.P4 letter of acceptance. It is
submitted that in the tender notification, the KSTP insisted that the
bidders submit their tender without the GST amount and approved
the amount quoted by the petitioner as the contractual amount.
Later, the claim for the GST amount was rejected stating that the
amount specified in the tender is inclusive of all taxes.
4. It is specifically contended that Clause 12.1 of the Letter
of Bid - Financial Part specifically provided that the Letter of Bid
shall be prepared using the relevant forms furnished in Section IV
of the bid document. It is stated that the forms must be completed
without any alterations to the text and no substitutes shall be
accepted except as provided under ITB 20.2. All blank spaces shall
be filled up with the information requested. It is stated that in the
online format, the bidder was enabled only to enter the rates in
column 5 and all other cells were disabled. The online column
provided that the rate to be entered is the basic rate and the format
WP(C) Nos.12471 & 12454 OF 2021
for entering the rate is provided along with Ext.P1 bid documents at
internal page Nos.110 and 111 in W.P.(C) No.12471/2021 and 112
and 113 in W.P.(C) No.12454/2021. It is stated that in Clause (b) of
the letter format, it is clearly stated that the total price of the bid
including any discounts offered is to be entered excluding the GST.
There was no column provided to furnish the GST amount along
with the bid.
5. The petitioner submitted his bid in the online format
with regard to the upgradation of Painavu - Thannikandom -
Ashoka Kavala road as per Exts.P2 and P3 in W.P.(C)
No.12471/2021 and the price quoted was Rs.95,40,00,000/-
excluding GST. The tender was accepted and performance
guarantee was required to be executed by Exts.P4 and P5. Contract
agreement was also entered into. Thereafter, the petitioner
submitted a request to the KSTP to pay the 1st instalment of the bill
raised inclusive of GST at the rate of 12%. However, the KSTP
approved only an amount equal to 2% of the contract price
deducting the GST claim. The petitioner approached the
respondents, but Ext.P8 reply was issued relying on Clause
No.19.1.2 of the contract which stated that the contract price
includes all duties, taxes, royalty and fees, that may be levied in
WP(C) Nos.12471 & 12454 OF 2021
accordance with the laws and regulations in force as on the base
date on the contractor's equipment, plant, materials and supplies
acquired for the purpose of this agreement and on the services
performed under this agreement.
6. In W.P.(C) No.12454/2021 the bid was for
Rs.98,10,00,000/- and the same was specifically required to be
quoted excluding GST and the bid was accepted and acted upon.
7. The learned counsel for the petitioner places reliance on
the circular dated 1.3.2019 which specifically states that the bid
amount should be excluding GST, but inclusive of other taxes and
duties. Though replies were submitted highlighting these aspects
also, the respondents have taken a stand that the claim made by the
petitioner for GST is breach of contract conditions and it cannot be
considered. It is further contended that subsequent to the issue
raised by the petitioner, the KSTP has made changes in the tender
notification by stating that the rates quoted must be inclusive of
GST.
8. The learned counsel for the petitioner places reliance of
a decision of this Court reported in Sebastian Jose v. State of Kerala
[2021 (5) KLT 445], where it was held that after incorporating
specific terms in the notice inviting tender that the bidders must
quote rates excluding GST, the employer cannot contend that the
WP(C) Nos.12471 & 12454 OF 2021
bidder ought to have quoted the rates including GST. Referring to
an earlier decision of a Division Bench of this Court in George C.A.
v. State of Kerala and Others [2021 KHC 2682], the learned Single
Judge held that in the document which provides for the price bid,
when there is a clear instruction that the price should be quoted
without taxes, the bidder cannot be blamed for not having
incorporated the tax element in the bid document. The Division
Bench in George C.A.'s case held that the fact that other contractors
had quoted the rates inclusive of taxes would not make any
difference to the situation since the conditions in the bid documents
specifically provided for quoting of rates without taxes. The decision
in Sebastian Jose's case had been taken in appeal and had been
affirmed by a Division Bench by its judgment dated 22.6.2022 in
W.A. No.1710/2021.
9. A detailed statement has been placed on record by the
respondents. It is contended therein that as per Clause 19.1.2 of
Article 19 of the agreement entered into between the parties, the
contract price is inclusive of all duties, taxes, royalty and fees and
that as such, the petitioner ought to have quoted the rate inclusive
of taxes. It is further contended that the primary liability to pay the
GST is on the petitioner, being a works contractor and that as such,
the petitioner ought to have quoted the price including GST. It is
WP(C) Nos.12471 & 12454 OF 2021
submitted that the provision made in the form for quoting the price
excluding GST was a typographical error in the Letter of Bid-
Financial Part which later came to the notice of the respondents
and that the same has been corrected in respect of later works. It
is contended that in the bidding document other than Letter of Bid-
Financial Part, it is clearly mentioned that the bid price/contract
price is inclusive of all taxes including GST and the petitioner ought
to have brought this matter to the notice of the respondents during
tendering stage and before executing the agreement. It is,
therefore, contended that since the agreement was executed on
24.1.2020 upon submission of performance security by the
petitioner on 10% of the contract price, the petitioner was very well
aware that the contract price was inclusive of all taxes including
GST and that all that is excluded from the contract price is the cost
of maintenance as stated in Clause 19.1.1. It is contended that the
petitioner having entered into a contract knowing fully well his
liability to pay the GST cannot be permitted to derive benefits from
an error committed by the respondents.
10. The learned Standing Counsel also places reliance on a
judgment of this Court dated 20.3.2019 in W.P.(C) No.27226/2018,
where this Court had considered the contentions that the difference
between the 4% of Value Added Tax which was in existence at the
WP(C) Nos.12471 & 12454 OF 2021
time of the bid and the 12% GST which was made applicable later
was to be paid by the contractor.
11. Having considered the contentions advanced, I notice
that it is the specific case of the petitioner that the bid documents
sought for quoting of the total contract amount excluding GST and
that the financial bid document required the quoting of amount less
GST is not disputed by the respondents. The respondents would
only contend that even though the form required the quoting of the
amount less GST, since the contract itself provided that the contract
amount would be inclusive of all taxes, GST has to be suffered by
the petitioner. I notice that the Division Bench of this Court in the
judgment dated 22.6.2022 in W.A. No.1710/2021 has specifically
considered an identical issue. It was found that the petitioner
therein had bid for the work and had quoted the amount specifically
excluding the component of GST from the quote in view of the
condition contained in the notice inviting tender. It was further
found that GST being a tax to be suffered by the ultimate
beneficiary, the Corporation for whom the work is done by the
contractor has to remit the same. It was held as follows :-
"14. The learned Single Judge has judiciously used his
discretion and allowed the writ petition declaring that the terms
and conditions in Ext.P1 shall govern the contract and that
WP(C) Nos.12471 & 12454 OF 2021
respondents 2 and 3 have to pay the GST component against the
bill raised by the petitioner. The decision cited by the counsel for
the appellat only prohibits the writ court from interfering in any
contractual matter and the interference in the auction procedure
when the decision making process is arbitrary and for any
extraneous consideration. In this case, the learned Single Judge
has not gone into the complexities of the clauses in the notice
inviting tender nor substituted any interpretation other than those
explicitly provided in the clause. In such view of the matter, the
decisions cited (supra) have no application to the facts of this case
and are distinguishable. The learned single judge was right in
declaring that the GST component was not to be included as per
clause 3.3.3 of Ext.P1 and the direction to pay the GST component
by respondents 2 and 3 is in tune with the clauses of Ext.P1 and
hence there are no ground to interfere with the judgment of the
learned Single Judge, and hence the writ appeal is dismissed."
The judgment relied on by the learned counsel for the respondentS
only considers the change in the rate of tax and does not apply to a
case where the bid amount was required to be specified excluding
the rate of GST.
In the above circumstances, I am of the opinion that the
issue raised herein stands covered by the judgment of the Division
Bench of this Court in W.A. No.1710/2021. Since the petitioner was
required to make a quote excluding the GST amount, I am of the
opinion that the petitioner cannot be mulcted with a liability of
payment of GST. The respondent who is the ultimate beneficiary of
the services performed by the petitioner has to pay the GST in
WP(C) Nos.12471 & 12454 OF 2021
respect of the work carried out. Since the bid was submitted by the
petitioner specifically excluding the GST element, I am of the
opinion that the petitioner is entitled to succeed in these writ
petitions. The writ petitions are, therefore, allowed. The impugned
orders are set aside. There will be a direction to the respondents to
consider the claim of the petitioner for GST element as well and to
take necessary steps for release of the amounts due in accordance
with law. Necessary steps shall be taken within a period of two
months from the date of receipt of a copy of this judgment.
Sd/-
ANU SIVARAMAN
JUDGE
Jvt/20.6.2023
WP(C) Nos.12471 & 12454 OF 2021
APPENDIX OF WP(C) 12471/2021
PETITIONER EXHIBITS :-
Exhibit P1 TRUE COPY OF RELEVANT PAGES OF THE INVITATION
FOR BID FOR THE UPGRADATION OF PAINAVU -
THANNIKKANDAM -ASHOKAKAVALA ROAD ISSUED BY THE
KSTP.
Exhibit P2 TRUE COPY OF THE RELEVANT PAGES OF THE ONLINE
FORMAT OF TENDER FOR UPGRADATION OF PAINAVU -
THANNIKKANDAM -ASHOKAKAVALA ROAD.
Exhibit P3 TRUE COPY OF THE RELEVANT PAGES OF FINANCIAL BID
FORMAT GIVEN ALONG WITH THE BID DOCUMENTS OF THE
TENDER FOR UPGRADATION OF PAINAVU -
THANNIKKANDAM -ASHOKAKAVALA ROAD.
Exhibit P4 TRUE COPY OF THE LETTER OF ACCEPTANCE ISSUED BY
THE SECOND RESPONDENT DATED 22.11.2019.
Exhibit P5 TRUE COPY OF THE LETTER DATED 16.01.2020
SUBMITTED BY THE PETITIONER.
Exhibit P6 TRUE COPY OF THE CONTRACT AGREEMENT DATED
24.01.2020 ENTERED BETWEEN THE PETITIONER AND
THE SECOND RESPONDENT.
Exhibit P7 TRUE COPY OF THE LETTER DATED 22.09.2020
SUBMITTED BY THE PETITIONER TO THE SECOND
RESPONDENT.
Exhibit P8 TRUE COPY OF THE REPLY LETTER DATED 13.11.2020
OF THE 3RD RESPONDENT.
Exhibit P9 TRUE COPY OF THE CIRCULAR OF FINANCE (INDUSTRIES
& PUBLIC WORKS-B) DEPARTMENT OF GOVERNMENT OF
KERALA BEARING NO.18/2019/FIN. DATED 01.03.2019.
Exhibit P10 TRUE COPY OF THE REPLY LETTER DATED 23.11.2020
SUBMITTED BY THE PETITIONER TO THE THIRD
RESPONDENT.
WP(C) Nos.12471 & 12454 OF 2021
Exhibit P11 TRUE COPY OF THE LETTER OF THE THIRD RESPONDENT
BEARING NO.KSTP/PMT/1882/2019 (PART-2)/AE-2
DATED 31.12.2020.
Exhibit P12 TRUE COPY OF THE LETTER DATED 21.01.2021
SUBMITTED BY THE PETITIONER TO THE THIRD
RESPONDENT.
Exhibit P13 TRUE COPY OF THE LETTER OF THE THIRD RESPONDENT
BEARING NO.KSTP/PMT/1912/2019 (PART-2)/AE-2
DATED 26.02.2021.
Exhibit P14 TRUE COPY OF THE RELEVANT PAGES OF THE TENDER
NOTIFICATION OF RE-TENDER OF REHABILITATION AND
UPGRADING THE ROAD THAVALAM TO MULLI OF MAJOR
DISTRICT ROAD (LENGTH OF 28.50 KM), IN PALAKKAD
DISTRICT UNDER REBUILD KERALA INITIATIVE (RKI)
DATED 13.08.2020 ISSUED BY THE KSTP.
Exhibit P15 TRUE COPY OF THE RELEVANT PAGES OF THE TENDER
NOTIFICATION OF UPGRADING URUVACHAL -MARUTHAAYI
ROAD (KM 0.000 (URUVACHAL) TO KM 20.900
(MARUTHAAYI) IN KANNUR DISTRICT UNDER REBUILD
KERALA INITIATIVE (RKI) DATED 27.07.2020 ISSUED
BY THE KSTP.
RESPONDENT EXHIBITS :-
ANNEXURE R1(a) TRUE COPY OF RELEVANT PAGES OF CONTRACT
ANNEXURE R1(b) TRUE COPY OF THE BIDDING CONDITIONS IN WHICH
THE PETITIONER HAD INCORPORATED THE AMOUNT
WHICH IS INCLUSIVE OF ALL TAXES
WP(C) Nos.12471 & 12454 OF 2021
APPENDIX OF WP(C) 12454/2021
PETITIONER EXHIBITS :-
Exhibit P1 TRUE COPY OF RELEVANT PAGES OF THE INVITATION
FOR BID FOR BC OVERLAY OF ADOOR TO CHENGANNOOR
(PART OF SH-1) KM + 93 + 400 (ADOOR) TO KM 117 +
200 (CHENGANNOOR) ISSUED BY THE KSTP.
Exhibit P2 TRUE COPY OF THE RELEVANT PAGE OF THE ONLINE
FORMAT OF TENDER FOR BC OVERLAY OF ADOOR TO
CHENGANNOOR (PART OF SH-1)
Exhibit P3 TRUE COPY OF THE RELEVANT PAGE OF FINANCIAL BID
FORMAT GIVEN ALONG WITH THE BID DOCUMENTS OF THE
TENDER FOR BC OVERLAY OF ADOOR TO CHENGANNOOR
(PART OF SH-1).
Exhibit P4 TRUE COPY OF THE TENDER OF ACCEPTANCE ISSUED BY
THE SECOND RESPONDENT DATED 22.11.2019.
Exhibit P5 TRUE COPY OF THE LETTER DATED 16.01.2020
SUBMITTED BY THE PETITIONER.
Exhibit P6 TRUE COPY OF THE CONTRACT AGREEMENT DATED
24.01.2020 ENTERED BETWEEN THE PETITIONER AND
THE SECOND RESPONDENT.
Exhibit P7 TRUE COPY OF THE LETTER DATED 22.09.2020
SUBMITTED BY THE PETITIONER TO THE SECOND
RESPONDENT.
Exhibit P8 TRUE COPY OF THE CIRCULAR OF FINANCE (INDUSTRIES
AND PUBLIC WORKS-B) DEPARTMENT OF GOVERNMENT OF
KERALA BEARING NO. 18/2019/FIN. DATED
01.03.2019.
Exhibit P9 A TRUE COPY OF THE LETTER OF THE THIRD
RESPONDENT BEARING NO. KSTP/368/2020/AE-7 DATED
24.02.2021.
Exhibit P10 TRUE COPY OF THE RELEVANT PAGES OF THE TENDER
NOTIFICATION OF RE-TENDER OF REHABILITATION AND
UPGRADING THE ROAD THAVALAM TO MULLI OF MAJOR
WP(C) Nos.12471 & 12454 OF 2021
DISTRICT ROAD (LENGTH OF 28.50 KM), IN PALAKKAD
DISTRICT UNDER REBUILD KERALA INITIATIVE (RKI)
DATED 13.08.2020 ISSUED BY THE KSTP.
Exhibit P11 TRUE COPY OF THE RELEVANT PAGES OF THE TENDER
NOTIFICATION OF UPGRADING URUVANCHAL -
MARUTHAAYI ROAD (KM 0.000) (URUVACHAL) TO KM
20.900 (MARUTHAAYI) IN KANNUR DISTRICT UNDER
REBUILD KERALA INITIATIVE (RKI) DATED 27.07.2020
ISSUED BY THE KSTP.
