HC: Denies relief to bidder of e-tender where tax liability transitioned from VAT to GST

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The Hon’ble HC, Kerala in the matter of Jilmon John v. State of Kerala [WP(C). No. 27226 of 2018 dated March 20, 2019] held that the Petitioner is not entitled to any relief under the e-tender with introduction of GST.


Superintending Engineer, PWD Roads and Bridges (“Respondent No. 3”) issued e-tender notice dated May 20, 2017 for “Improvements to Thodupuzha Pappootty Hall Vellangallor (River V View) Road”.

Jilmon John (“the Petitioner”) submitted a tender on June 6, 2017 taking into account the rate of works tax at the rate of 4% stipulated in Section 8 of the Kerala Value Added Tax Act, 2003 (“KVAT”) as per the special conditions contained in the notice inviting tender. By letter dated July 14, 2017 the Respondent No. 3 accepted the tender submitted by the Petitioner with probable amount of contract of ₹ 4,66,38,279/- and directing him to execute an agreement for carrying out the works.

Petitioner requested either to reimburse the additional tax imposed at 14% over the 4% specified in e-tender or cancel it and release and refund the EMD of ₹ 2,00,000/- furnished by the Petitioner and insisted acceptance of the tender submitted without any variation from e-tender. Anyhow the State of Kerala (“Respondent No. 1”) sent letter to the Petitioner without considering the request either to reimburse differential tax imposed by the GST or to release the EMD of ₹ 2,00,000/- furnished by Petitioner along with the tender. Respondent No. 3 directed to execute an agreement for carrying out the works with GST, which according to the Petitioner, is not incorporated in e-tender and therefore, the action is without jurisdiction and illegal and letters are illegal and arbitrary.


Whether the Petitioner is liable to pay GST in the present case where e-tender was awarded in the previous VAT regime?


The Hon’ble HC, Kerala in WP(C). No. 27226 of 2018 dated March 20, 2019 held as under:

  • There is a stipulation contained under clause 44 of e-tender that, the Sales Tax as per Rules from time to time is liable to be paid by the Petitioner and the rates quoted for various items remain unaffected by any changes that may be made from time to time at which such tax is levied. The case projected by the Petitioner is that, as per the special condition, Petitioner is liable to pay Value Added Tax at the rate of 4%. However, on a harmonious construction of clause 44 as well as special condition contained under e-tender, even though Petitioner was only liable to pay tax at the rate of 4% when notice inviting tender was issued, if during the course of proceedings or even after execution of the agreement, if the tax is increased, Petitioner is liable to pay the same as per the stipulations contained under clause 44 quoted above without insisting for any rate variation. Also, the tender is to be submitted by a bidder considering various factors and components and a little bit of speculation is also required.
  • When clause 44 was incorporated in e-tender notification and the introduction of GST was under comprehension and in fact it was made without being introduced and therefore, it cannot be said that, Petitioner was not aware of the likelihood of legislation being introduced on and with effect from a future date. Therefore, necessarily, Petitioner ought to have visualised such a situation and the rates should have been quoted only in accordance with the same. It is also clear from preliminary agreement, Petitioner has quoted less than the probable amount of contract and according to the learned Special Government Pleader, Petitioner wants now to wriggle out of the contract without causing any injury to him.
  • GST is nothing but tax on supply of goods, supply of service and supply of goods and services, however, a homogeneous mixture of several of the indirect taxes under a single umbrella, having uniform rate throughout the country, on any goods or service covered by GST. Therefore, the contention advanced by learned counsel for Petitioner that, GST is not tax enabling The Secretary to the Govt (“Respondent No. 2”) and the State of Kerala as well as the Superintending Engineer (collectively called “Respondents”) to rely upon clause 44 of e-tender, is devoid of merits.

Conclusively the Hon’ble Kerala HC ordered that the writ petition in the present case has no sustenance and accordingly dismissed the same.