Bid Disqualification Upheld; Bidder's GST registration was cancelled before was considered

Bid Disqualification Upheld; Bidder’s GST registration was cancelled before was considered

Issue: Whether a petitioner-bidder’s disqualification from a tender due to GST registration cancellation is valid, and whether the tender process was vitiated by the bid opening occurring beyond the 180-day validity period.

Facts:

The petitioner-bidder filed a writ petition seeking to quash a Notice Inviting Tender (NIT) dated January 19, 2024.
The petitioner was disqualified by the respondent department because their GST registration was “cancelled suo moto.”
The petitioner argued they had a valid GST registration when they submitted the bid, making the disqualification incorrect.
The respondent department argued that the GST registration was cancelled before the bid was considered, rendering the petitioner ineligible.
The petitioner also argued that the tender was opened beyond the 180-day bid validity period, violating rule 2.6, and therefore their bid was no longer valid.
The successful bidder (respondent no. 3) submitted that the bid would remain valid if the proposer (bidder) agreed to extend the validity beyond 180 days.

Decision:

The court held that it was agreed that the proposer could extend the validity of their bid.
The court found that the GST registration was indeed cancelled before the date of considering the bid.
Therefore, the court held that the respondent department’s decision to disqualify the petitioner and award the contract to the successful bidder was correct.
The writ petition was dismissed as there was no merit in the petitioner’s claims.

Key Takeaways:

GST Registration Validity: The validity of GST registration is crucial at the time of bid consideration, not just at the time of bid submission.
Bid Validity Extension: Bidders can agree to extend the validity of their bids beyond the initial period specified in the tender documents.
Disqualification Justification: Cancellation of GST registration before bid consideration is a valid ground for disqualification.
Contract Award: The department’s decision to award the contract to the next eligible bidder is upheld when the disqualified bidder’s claims lack merit.
Sections 29 and 30 of Central Goods and Services Tax Act, 2017/Odisha Goods and Services Tax Act, 2017: These sections deal with the cancellation of GST registrations.
The court is reinforcing the importance of maintaining valid GST registration, and the validity of extending bid validity periods when agreed upon.

HIGH COURT OF ORISSA

Janakalyana Parisada

State of Odisha

Arindam Sinha, Actg. CJ.
and M.S. Sahoo, J.

W.P.(C) No.24756 of 2024

JANUARY 27, 2025

Jagajit Panda, Adv. for the Petitioner. Mrs. Suman Pattanayak, Addl. Govt. Adv. and Gouri Mohan Rath, Adv. for the Respondent.

ORDER

1. Mr. Panda, learned advocate appears on behalf of petitioner and submits, prayer of his client is for quashing of notice inviting tender (NIT) dated 19^th January, 2024. Drawing attention to clause-2.6 on validity of proposals he submits, the tender was opened beyond 180 days. Without prejudice he submits further, his client was disqualified on reason given that ‘GST was cancelled suo moto’. A valid GST registration number was submitted by his client on the bid. As such, the reason is misconceived. He seeks interference.

2. Mrs. Pattanayak, learned advocate, Additional Government Advocate appears on behalf of State and submits, petitioner was disqualified on finding that his registration with the tax authority stood cancelled. As such he became ineligible to remain in consideration for award of the work under tender.

3. Mr. Rath, learned advocate appears on behalf of added opposite party no.3. He submits, his client was successful bidder and there has been agreement executed on award of the work to him.

4. Clause 2.6 is reproduced below.

“The Proposal shall remain valid for 180 days after the date of bid opening. Any Proposal, which is valid for a shorter period, shall be rejected as non-responsive.”

5. On query made Mr. Panda submits, consent was sought by the employer for extension of the period. It could not have been extended. Fresh NIT ought to have been issued. Mr. Rath submits, extension of the period of validity of proposals depends on the proposer. His client consented to extend validity of the proposal made.

6. We accept submission made on behalf of opposite party no.3 that validity of a proposal can be extended by the proposer. So far as cancellation of revenue registration of petitioner is concerned, it appears the registration was cancelled prior to 20^th September, 2024. The cancellation is on reason given by FORM GST REG-17, disclosed by opposite party no.3 in his counter. We understand phrase ‘suo moto’ used in letter dated 20^th September, 2024, giving information including disqualification of petitioner to be that his registration certificate was cancelled by the taxing authority. It being one of the arms of State, the phrase was used.

7. We do not find merit in the writ petition. It is dismissed.