WA 38/2010 BEFORE THE HON’BLE MR JUSTICE IA ANSARI THE HON’BLE MR JUSTICE AC UPADHYAY JUDGMENT & ORDER (IA Ansari, J.) Whether Value Added Tax (in short, ’VAT’) is different in nature from sa les tax and whether the requirement of furnishing of Sales Tax Clearance Certifi cate in a tender process would, since after enactment of the Value Added Tax Act , mean VAT Clearance Certificate or not? Whether Sales Tax Clearance Certificate is, by its very nature, different from VAT Clearance Certificate? Whether the r equirement of submission of VAT Clearance Certificate on supply of woolen blanke ts can be said to be fulfilled on the submission of VAT Registration Certificate granted under a scheme of composition of the fiscal statute in respect of a wor ks contract? What is the scope of interference in a writ appeal with an order pa ssed in the writ petition dismissing the appeal where a new plea is wholly barre d from being raised in a writ appeal if the plea was not taken in the writ petit ion? What is the scope of judicial review in contractual matters? These are the prominent questions, which have to be answered in this appeal. 2. The material facts, leading to this appeal, may, in brief, be set out as foll ows: Pursuant to a tender notice, dated 30-09-2009, issued by respondent No. 2, namel y, Inspector General of Prisons, Assam, inviting tenders with samples from inten ding suppliers/ recognized manufacturers/dealers or their agents for supply of w oolen blankets/materials for warden’s uniform for the jails of Assam, the writ p etitioner (who is respondent No. 1 herein), the appellant (who was respondent No .4 in the writ petition) and some others submitted their respective tenders for supply of woolen blankets. On 20-10-2009, when the tenders were opened, the lowe st bidder’s tender was found to be non-responsive inasmuch as he had not submitt ed separate tenders for different types of supply materials mentioned in the sai d tender notice. The writ petitioner-respondent No.1’s bid was found to be the s econd lowest and the appellant was found to be the third lowest bidder. As the l owest bidder’s tender was found to be non-responsive, the respondent No.1, who c laimed to be the second lowest bidder, filed a writ petition, under Article 226 of the Constitution of India, which gave rise to WP(C) No. 4858 of 2009, seeking issuance of appropriate writ(s) commanding the State respondents/authorities co ncerned to allot the work, in question, to the writ petitioner (i.e., respondent No.1 herein). This writ application was, however, withdrawn, on 16-11-2009, wit h liberty to approach this Court, in future, if any decision was taken by the au thority concerned against the writ petitioner-respondent No.1 herein. 3. As the State respondents decided to allot the work of supply of woolen b lankets to the present appellant, respondent No. 1 filed another writ petition, under Article 226 of the Constitution of India, which gave rise to WP(C) No. 586 2 of 2009, the case of the respondent No. 1 being, in brief, thus: The writ peti tioner (i.e., respondent No. 1) came to learn that on 17-11-2009, a meeting had been held for taking a decision in the matter of allotment of supply work of woo len blankets and, on request made by the respondent No. 1, respondent No. 3 prov ided the respondent No. 1 with a copy of the minutes of the meeting, which, on b eing examined by the respondent No. 1, revealed that a decision had been taken, in the meeting held on 17-11-2009, to award the contract for supply of woolen bl ankets to the appellant @ Rs. 235/- per woolen blanket. The respondent No.1 acco rdingly filed the second writ petition seeking to get set aside and quashed the decision, which had been taken by the State respondents/authorities concerned to allot the contract to the appellant and, further, for a direction to be issued to the State respondents/authorities concerned to allot the contract, in questio n, to the respondent No.1. 4. In the meanwhile, however, respondent No.3, namely, Inspector General of Prisons, Assam, informed the appellant, by the communication, dated 27-11-2009, that the appellant’s sample of woolen blanket had been approved as per the rate and requirements mentioned in the list enclosed in the said communication. By t he communication, dated 27.11.2009, aforementioned, respondent No.3 requested th e appellant to deposit the security money as per terms and conditions of the ten der notice and execute the deed of contract. Following the communication, dated 27-11-2009, aforementioned, the appellant deposited a sum of Rs. 2,82,000/- as s ecurity deposit and the deed of contract was accordingly executed on 08-12-2009 and, on the same day, a work order was placed with the appellant asking the appe llant to supply 12,000 woolen blankets. By an interim order passed in the second writ petition, the supply of woolen blankets by the appellant was, however, kep t suspended. 5. During the progress of the writ proceeding, it surfaced that the bid of the respondent No.1 had been rejected by the State respondents/authorities conce rned on, broadly speaking, two grounds, namely, (i) non-submission of the ’sales tax clearance certificate’ and (ii) the omission of the respondent No.1 to plac e ’earnest money’ in favour of the Inspector General of Prisons, Assam, inasmuch as the respondent No. 1 was found, according to the State respondents/authoriti es concerned, to have placed the ’earnest money’ in favour of the IGP. The conte ntion of the respondent No. 1, in the writ petition, was that in its application , made to the postal authorities, the respondent No. 1 had applied for pledging of the ’earnest money’ in favour of the Inspector General of Prisons, Assam, and the said application was accordingly endorsed by the Superintendent of the offi ce of the Inspector General of Prisons, Assam, and, hence, the description of th e pledging authority as IGP, which was shorter version of the term ’Inspector Ge neral of Prisons’, appearing in the relevant NSC/KVP, ought not to have been tre ated to have disqualified the writ petitioner-respondent No.1. As regards the no n-submission of the ’sales tax clearance certificate’, the writ petitioner-respo ndent No.1 contended, in the writ proceeding, that the Assam General Sales Tax A ct, 1993 (in short, ’the AGST Act, 1993,’) stood repealed and replaced by the As sam Value Added Tax Act, 2003 (in short, ’VAT Act, 2003’) and with the coming in to force of the VAT Act 2003, the question of furnishing ’sales tax clearance ce rtificate’ could not have arisen and, hence, the condition, mentioned in the ten der notice, requiring the tenderers to submit ’sales tax clearance certificate’ was a condition, which was impossible to be performed. Consequently, furnishing of ’sales tax clearance certificate’ ought not have been insisted upon by the St ate respondents/authorities concerned and the writ petitioner-respondent No.1’s tender ought not to have been treated, on the said ground, non-responsive. 6. In order to buttress its above submissions, the writ petitioner-responde nt No. 1 herein also contended, in the writ petition, that none of the tenderers had submitted ’sales tax clearance certificate’ and what the appellant had subm itted was also a VAT clearance certificate and not a ’sales tax clearance certif icate’ and, hence, the rejection of the tender of the writ petitioner-respondent No.1, on the ground of non-furnishing of ’sales tax clearance certificate’, was illegal and unjustified. The writ petitioner-respondent No.1 further contended, in the writ proceeding, that a VAT registration certificate had been furnished by the writ petitioner-respondent No. 1 along with a copy of the permission, gra nted by the Superintendent of Taxes, allowing the writ petition-respondent No. 1 to pay composition amount of the VAT payable by the writ petitioner-respondent No. 1 on civil work, executed by the writ petitioner-respondent No.1, and this c ertificate was sufficient compliance of the requirement of furnishing of ’sales tax clearance certificate’ and, hence, in the light of these facts, the State re spondents/authorities concerned ought not to have denied the allotment of the co ntract to the writ petitioner-respondent No. 1 by contending that the writ petit ioner-respondent No. 1 had not furnished the requisite ’sales tax clearance cert ificate’ despite the fact that the writ petitioner-respondent No.1 was the lowes t valid tenderer inasmuch as the lowest tenderer’s tender had been found, as alr eady indicated above, non-responsive and invalid. 7. The contentions of the writ petitioner-respondent No. 1 found favour wit h a learned Single Judge of this Court inasmuch as the learned Single Judge, ref erring to the decision, in Global Energy Ltd. V. MS Adani Export Ltd. (AIR 2005 SC 2653) and Bidhu Bhusan Choudhury V. Union of India, reported in 2000 (1) GLT 342, observed that the rejection of the writ petitioner’s tender as invalid on t he ground of omission to give complete description of the pledging authority, in the pledging documents, is not justified and is illegal inasmuch as the postal authority had, later on, clarified that the document, in question, stood pledged in favour of the Inspector General of Prisons, Assam. In so far as the requirem ent of furnishing of the ’sales tax clearance certificate’ was concerned, the le arned Single Judge took the view that the tender documents did not require furni shing of VAT clearance certificate and, in the absence of VAT clearance certific ate, the writ petitioner’s tender could not have been treated as invalid and as far as ’sales tax clearance certificate’ is concerned, since none of the tendere rs had produced ’sales tax clearance certificate’, the rejection of only of the writ petitioner’s tender, on the ground of non-submission of ’sales tax clearanc e certificate’, was wholly unjustified. The relevant observations, made by the l earned Single Judge, in arriving at the findings aforementioned, are reproduced below: 16. The arguments advanced by the rival counsels indicate that the d ispute in the present case can be resolved by answering as to whether the tender of the petitioner could be considered invalid because of his failure to supply a Sales Tax Clearance Certificate and whether under Clause 7 (a) , a tenderer is required to furnish a of VAT clearance certificate instead of a Sales tax clear ance certificate and on that basis their tenders are accepted for consideration, whereas the petitioner’s tender has not been considered, due to non submission of the Sales Tax Clearance certificate which according to the Purchase Committee is required to be submitted as per Clause 7(a) of the tender notice. 17. Even on a prima facie reading of Clause 7(a) it can be gathered that the re is no requirement of furnishing a VAT tax clearance certificate under such ci rcumstance in my view, the petitioner could not have been considered to be a inv alid tenderer under Clause 7(a), for non furnishing of a VAT clearance certifica te as that was not stipulated in any of the clauses of the tender notice. In any case from the proceeding of the departmental Purchase Committee held on 17/11/0 9(Annexure- G), the petitioner’s tender was rejected for not furnishing a Sales Tax Clearance Certificate. As his tender was considered invalid for non submission of the Sales tax clearan ce certificate and since none of the tenderers have produced Sales Tax Clearance certificate, their rejection only of the petitioner’s tender on this ground has to be declared as unjustified. In this context the reference to Section 8 of the General Clauses Act by Mr. Cha liha in my considered view has no application in as much as in the case in hand , the Court is not scrutinizing a provision of any enactment but is examining th e purport of a tender clause only. 18. *** *** *** *** *** *** 19. Selection of a party to execute a supply work through tender process would n ormally require selection of the party who has quoted the lowest price and in th is case the petitioner’s quotation was lower than the respondent No.4 to whom th e work order was issued. Considering the lower quotation of the petitioner, he h as a better right in my view to secure the contract in question and under such c ircumstances the work order granted in favour of the respondent No.4 is declared to be illegal. 8. The learned Single Judge, thus, held that though the tender of the writ petitioner was considered invalid for non-submission of the ’sales tax clearance certificate’, the fact remains that when none of the tenderers had produced the ’sales tax clearance certificate’, rejection of the writ petitioner’s tender al one, on the said ground, was unjustified. The learned Single Judge further held that the work, allotted in favour of the appellant, was illegal inasmuch as the writ petitioner’s quoted rate for supply of blanket was lower than that of the a ppellant and the writ petitioner, therefore, had a better right to secure the co ntract, in question. Aggrieved by the decision so reached in the writ petition, the unsuccessful tenderer, who stood impleaded as respondent No. 4 in the writ p etition, has preferred this appeal. 9. We have heard Dr. AK Saraf, learned Senior counsel, appearing on behalf of the appellant, and Mr. S Kataki, learned counsel for the writ petitioner-resp ondent No. 1. We have also heard Ms. B Goyal, learned Government Advocate, appea ring on behalf of the State respondents. 10. Assailing the decision reached in the writ petition, Dr. Saraf, learned Senior counsel, submits that the learned Single Judge’s finding, that Clause 7(a ) of the tender notice did not require VAT clearance certificate, is erroneous i nasmuch as sales tax is collected by the State by virtue of Entry 54 of List II of the Second Schedule of the Constitution of India and both, the AGST Act, 1993 , as well as the VAT Act, 2003, have been enacted by taking recourse to Entry 54 of List II as aforementioned. Dr. Saraf contends that any tax, collected by tak ing recourse to any of the said two enactments, namely, the AGST Act, 1993, as w ell as the VAT Act, 2003, is nothing, but collection of sales tax and the ’sale s tax clearance certificate’, in the context of the facts of the present case, m eans a certificate from the competent authority evidencing clearance of tax on s ales. Dr. Saraf points out that the writ petitioner-respondent No. 1 had not sub mitted VAT registration certificate as is warranted in respect of normal sales, but what the writ petitioner-respondent No.1 had submitted was a VAT registratio n certificate under the scheme of composition of tax pertaining to works contrac t executed by the writ petitioner. Such a registration, contends Dr. Saraf, had no relevance whatsoever in the present case, wherein the transaction amounted to sale of woolen blankets by the selected tenderer to the State respondents/autho rities concerned and the purchase thereof by the State respondents/authorities c oncerned. 11. Assailing the finding of the learned Single Judge to the effect that the writ petitioner’s quoted rate for supply of blankets was lower than that of the appellant, Dr. Saraf points out that as per Clause 17 of the tender conditions, the tenderers were required to quote their rates inclusive of all taxes and cha rges. Drawing our attention to the tender documents of the writ petitioner, whic h formed part of the writ petition, Dr. Saraf points out that these documents cl early reveal that the rate, quoted by the writ petitioner, did not include VAT p ayable on the woolen blankets offered to be supplied. Dr. Saraf further points o ut that since the woolen blankets are taxable @ 4% and if the element of tax, so payable, is taken into consideration, the rate, quoted by the writ petitioner, would become higher than that of the appellant, but this aspect of the case appe ars to have completely escaped attention of the learned Single Judge while takin g the view that the writ petitioner-respondent No.1 herein was the lowest valid tenderer. 12. The learned Single Judge, thus, according to Dr. Saraf, fell into error in not taking into account the fact that the tender notice required quoting of r ate by the tenderer inclusive of VAT and since the writ petitioner had not inclu ded, within its quoted rate, the VAT, which was payable on supply of blankets th e writ petitioner’s quoted rate could not have been taken to be lower than that of the appellant, particularly, when the addition of the tax element of 4% would clearly make the writ petitioner’s quoted rate much higher than that of the app ellant. Dr. Saraf contends that since the writ petitioner had violated the essen tial conditions of the tender notice by not submitting the ’sales tax clearance certificate’ and by quoting a rate, for supply of blankets, without including, w ithin its quoted rate, the taxable element of 4% payable as VAT, the State respo ndents/authorities concerned were wholly justified in rejecting the tender of th e writ petitioner and the learned Single Judge, in the face of such glaringly no ticeable facts and the law relevant thereto, committed manifest error of law in allowing the writ petition and in setting aside the award of contract, in questi on, made in favour of the appellant. As far as the learned Single Judge’s findin g in respect of pledging of the ’earnest money’ is concerned, this finding has n ot been assailed before us. 13. Resisting the above submissions, made on behalf of the appellant, Mr. S Kataki, learned counsel, appearing on behalf of the writ petitioner-respondent N o. 1 herein, submits that no issue, as regards non-furnishing of appropriate VAT registration certificate, had been raised in the writ petition and the appellan t may not, therefore, be permitted, now, to raise this issue in the present appe al. So far as the non-submission of the ’sales tax clearance certificate’ is con cerned, Mr. Kataki submits that in the tender notice, since the condition impose d was submission of ’sales tax clearance certificate’, whereas the AGST Act, 199 3, already stood repealed, fulfillment of such a condition was an impossibility and could not have, therefore, been insisted upon or taken as a ground for rejec ting the writ petitioner’s tender, particularly, when other tenderers too, inclu ding the appellant, had not submitted any ’sales tax clearance certificate’. Mr. Kataki further submits that since the tender notice did not require submission of VAT clearance certificate, the condition of furnishing of VAT clearance certi ficate and/or the ’sales tax clearance certificate’ could not have been read, an d ought not to be read, into the terms and conditions embodied in the tender not ice. Mr. Kataki contends that in a tender process, there cannot be any implied t erm and a Notice Inviting Tender cannot be interpreted on the basis of what the authorities might have intended and that the requirement of law is that the con ditions, incorporated in a Notice Inviting Tender, must be read as they appear i n the Notice Inviting Tender. In support of his submissions, Mr. Kataki places r eliance on Commr. of Police v. Gordhandas Bhanji (AIR 1952 SC 16). 14. Controverting the submissions made on behalf of the appellant that since the rate, quoted by the writ petitioner, was not inclusive of VAT, the same was not in conformity with the conditions of the tender notice and if the element o f VAT payable was taken into account, the rate, quoted by the writ petitioner-re spondent No. 1, would become higher than the rate quoted by the appellant, Mr. K ataki submits that there was a declaration by the writ petitioner, in the tender documents, that the writ petitioner would abide by all the terms and conditions of the tender notice and, hence, even though the rate, quoted by the writ petit ioner, was exclusive of VAT, the said declaration given by the writ petitioner s hall be construed to mean that the rate, which had been quoted by the writ petit ioner, was a rate inclusive of VAT and not exclusive of VAT even though the writ petitioner had mentioned, in the tender documents, that its offered rate was ex clusive of VAT. 15. As regards the appellant’s contention that appropriate VAT registration certificate was not submitted by the writ petitioner with the tender documents, Mr. Kataki contends that the requirement, under the tender notice, was submissio n of VAT registration certificate and it does not really matter whether the VAT registration certificate, in question, which the writ petitioner had submitted, was under a scheme of composition of tax or in respect of regular sales of goods by the writ petitioner. Mr. Kataki further submits that it is true that the VAT registration certificate, issued to the writ petitioner, was under the scheme o f composition of VAT payable and the same relates to a works contract; but even supply of woolen blankets, according to Mr. Kataki, can be classified as a works contract and, hence, the submission of VAT clearance certificate, granted under the scheme of composition of tax payable in respect of works contract, was a su fficient compliance of the conditions of tender notice. 16. Referring to an affidavit filed by the writ petitioner, in the present a ppeal, taking some additional grounds, Mr. Kataki submits that in terms of Claus e 6 of the tender notice, an intending tenderer was required to deposit ’earnest money’ equivalent to 2% of the estimated value of the articles to be supplied. The appellant, however, contends Mr.Kataki, submitted ’earnest money’ in respect of its quoted price of Rs. 271/- only, but did not deposit ’earnest money’ in r espect of its quoted price of Rs. 235/- and/or of Rs. 289/- and the appellant ha d, thus, not, according to Mr. Kataki, fulfilled the essential condition of the tender notice, but this aspect, submits Mr. Kataki, could not be agitated in the writ petition by the writ petitioner. On totality of the circumstances, therefo re, the writ petition, contends Mr. Kataki, has been justifiably allowed and the decision, reached therein, may not, submits Mr. Kataki, be interfered with. 17. Appearing on behalf of the State respondents/authorities concerned, Ms. Goyal, learned Government Advocate, submits that the essential conditions of the tender notice had not been complied with by the writ petitioner as indicated ab ove and, hence, the rejection of the writ petitioner’s bid was wholly correct an d justified and the interference, in the writ petition with the decision to awar d the contract, in question, in favour of the appellant, was not called for and may, therefore, be corrected in this appeal. 18. Repelling the submissions made on behalf of the writ petitioner-responde nt No.1, Dr. Saraf submits that a VAT registration certificate, under the scheme of composition of VAT payable for execution of works contract, cannot be equate d to the normal sale and supply of woolen blankets, for, supply of woolen blanke ts, according to Dr. Saraf, is not a works contract. Dr. Saraf contends that the VAT registration certificate, which the writ petitioner had submitted, suffered from two incurable defects inasmuch as the VAT registration certificate, submit ted by the writ petitioner, was not the normal certificate of registration evide ncing registration of the appellant as a dealer as envisaged in the VAT Act, 200 3, for sale of goods and, secondly, the VAT registration certificate, which the petitioner had submitted, was in respect of works contract, which is different f rom normal sale and supply of materials, such as, supply of woolen blankets. Th us, according to Dr. Saraf, the VAT registration certificate, granted to the wri t petitioner under the provisions of composition, is not a normal VAT