State Can’t Refuse to Incorporate Enhanced GST Rates in Quoted Amount of Successful Bidder Before Hike | HC

Case Details: Asha Construction v. State of West Bengal - [2024] 158 taxmann.com 463 (Calcutta)

Judiciary and Counsel Details

• • Sabyasachi Bhattacharyya, J.
  • Soumya Majumder, Subhabrata Das, Amartya pal & Kartick Kumar Goyal for the Petitioner.
  • Amal Kumar Sen & Ms Ashima Das (Sil) for the Respondent.

Facts of the Case

The petitioner participated in a tender and was declared successful bidder. The acceptance order was issued to it indicating GST payable at 12%. Subsequently, the GST rate was enhanced from 12% to 18% by a notification. The petitioner sought to incorporate enhanced 6% in rates quoted by it but the department refused to grant work order and also forfeited Earnest Money Deposit (EMD) made by the petitioner.

It filed writ petition against the refusal of department to grant work order and forfeiture of EMD and contended that as per a Memorandum issued by the Finance Department, Government of West Bengal, the petitioner should be allowed to enhance 6% GST in rates quoted.

High Court Held

The Honorable High Court noted that as per tender document, the contractor whose tender shall be accepted shall make formal agreement within seven days and if he fails to do so, tender would be liable to be cancelled and earnest money forfeited. However, in the present case, there were subsequent correspondences between the petitioner and department even after expiry of seven days, amounting to acknowledgement and by such conduct, the department waived its rights of cancellation under clause 19 of tender document.

Therefore, the department was duty bound to permit petitioner to enhance GST rates by 6% in terms of their own Memorandum. The Court also noted that the State actions have to be scrutinized on a higher standard of fairness than the action of private employers. Therefore, the Court held that the refusal by department to give work order to petitioner was to be set aside.