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2019 DIGILAW 173 (AP)

Man Power Servicing Agencies v. Union of India

2019-08-07

J.UMA DEVI, M.SEETHARAMA MURTI

body2019
ORDER : M. Seetharama Murti, J. 1. This writ petition, under Article 226 of the Constitution of India, is filed by the petitioner seeking verbatim the following. Relief’s: "..to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the proceedings in C. No. I/22/12/2018-Admn., dated 26.04.2019 and the consequential tender notification bearing C. No. I/22/12/2018-Admn., dated 26.04.2019 issued by the respondents 3 and 4 as illegal, arbitrary, violation of principles of natural justice and violation of Articles 14 and 19(1)(g) of the Constitution of India and consequently direct the respondents 3 and 4 to award the work order to the petitioner in pursuance of tender notification C. No. I/22/12/2018-Admn., dated 7.3.2019 considering representation dated 08.05.2019, and pass such other order or orders.." 2. We have heard the submissions of Sri Venkateswarlu Nimmagadda, learned counsel, appearing for the petitioner and of Sri B. Krishna Mohan, learned Assistant Solicitor General, appearing for the respondents. We have perused the material record. 3. Shorn of unnecessary details, advertence can be made to the following relevant facts. 4. The Commissioner of Central Taxes, CGST, Guntur Commissioner ate, issued tender/quotation notice, dated 07.03.2019, inviting from eligible bidders sealed quotations/tenders in respect of providing housekeeping work for 8 hours a day, that is, from 08:00 hrs., to 12:00 hrs and from 15:00 hrs to 19:00 hrs in the offices/formations under Guntur CGST Commissioner ate. The petitioner became a successful tenderer and the petitioner's tender has been selected as L1. Later, by letter, dated 26.04.2019, the Joint Commissioner-4th respondent informed the petitioner as follows: 'Please refer this office tender dt. 07-03-2019 for Housekeeping Services of Guntur Commissionerate for the financial year 2019-20 wherein your organization have been selected as L1. In this regard it is informed that since M/s. Man Power Servicing Agencies is a defaulter of huge Service Tax amount due for this department, the tender called for vide this office letter of even number dt. 07-03-2019 for housekeeping services is cancelled.' [reproduced verbatim] Later, a fresh tender notification, dated 26.04.2019, was issued. Aggrieved thereof, the present writ petition is filed. 5. The only ground for cancellation is that the petitioner is a defaulter of huge-service tax. 6. 07-03-2019 for housekeeping services is cancelled.' [reproduced verbatim] Later, a fresh tender notification, dated 26.04.2019, was issued. Aggrieved thereof, the present writ petition is filed. 5. The only ground for cancellation is that the petitioner is a defaulter of huge-service tax. 6. Learned counsel for the petitioner submits that it is borne out by record that insofar as the liability to pay the tax, the matters are subjudice before the competent authorities/fora and that unless the said legal proceedings attain finality and the liability, if any, is determined, as per law, the petitioner will not become a defaulter much less a 'declared defaulter' and that as long as the disputes regarding liability of the petitioner to pay the taxes in question are not resolved in favour of the department, the petitioner cannot be termed as a defaulter and, therefore, on the ground that the petitioner is a defaulter of huge service tax, cancellation cannot be done and hence, the petitioner is entitled to the reliefs claimed in this writ petition. 7. Learned Assistant Solicitor General of India appearing for the respondents invited the attention of this Court to the tender notification, dated 07.03.2019, wherein it is stated that the Commissioner of Central Tax, CGST, Guntur Commissionerate, reserves the right to cancel, postpone, reject, accept the quotations/tenders and submitted that in view of the said clause or condition in the tender notification, the cancellation in exercise of the said right reserved is valid. 8. However, learned counsel for the petitioner submitted that the question is not about the right to cancel but the validity and correctness of the ground for cancellation, that is, the imputation that the petitioner is a defaulter of huge service tax amount, which is due and payable to the department. 9. It is borne out by record that, on 20.10.2015, a show cause notice was issued by the Additional Commissioner, Office of the Commissioner of Central Excise and Service Tax, Guntur, to the petitioner requiring to show cause on the following aspects: (i) An amount of Rs. 29,90,019/- (Rs. 29,02,937/- towards service tax, Rs. 58,000/- towards Education Cess and Rs. 9. It is borne out by record that, on 20.10.2015, a show cause notice was issued by the Additional Commissioner, Office of the Commissioner of Central Excise and Service Tax, Guntur, to the petitioner requiring to show cause on the following aspects: (i) An amount of Rs. 29,90,019/- (Rs. 29,02,937/- towards service tax, Rs. 58,000/- towards Education Cess and Rs. 29,082/- towards S & H Ed.Cess), being the amount of service tax and cess not paid on the amount of taxable service earned by rendition of 'manpower recruitment or supply agency' services, during the period from 2010-11 to 2013-14, should not be demanded and recovered from them under the proviso to Section 73(1) of the Finance Act, 1994 read with Section 66 and 66B of the Finance Act, 1994 as applicable during the relevant periods; (ii) Interest at applicable rates, under Section 75 of the Finance Act, 1994 read with relevant Notifications issued from time to time, should not be paid by them on the amount mentioned at Sl. No. (i) above; (iii) Penalty under Section 76 of the Finance Act, 1994 should not be imposed for failure to pay service tax in accordance with the provisions of Section 68 of the Finance Act, 1994; (iv) Penalty under Section 77(c)(i)&(ii)&(iii) of the Finance Act 1994 for failure to furnish information called for during the proceedings, produce documents called for during the proceedings and to appear before the Central Excise officer other summons. (v) Penalty under Section 78 of the Finance Act, 1994 for reasons detailed at paragraph 10 of this notice to show cause should not be imposed. The Additional Commissioner, by an order, dated 31.05.2016, vide Order-In-Original No. 16/2016-17, having regard to the facts and circumstances and for the reasons recorded in the order, dropped all proceedings initiated against the petitioner vide show cause notice, dated 20.10.2015. It is also borne out by record that the Assistant Commissioner of Central Excise & Customs, Guntur Division, Guntur Commissionerate, filed an appeal in view of the Review Order No. 09/2016, dated 27.09.2016, against the Order-in-Original No. 16/2016-17 - S.T., dated 31.05.2016, issued in C. No. V/ST/15/122/2015-Adj/O.R. No. 111/2015 - S.T. passed by Additional Commissioner of Central Excise & Customs, Guntur Commissionerate in respect of the petitioner. While disposing of the said appeal, the Commissioner of Appeals passed an order, dated 29.06.2018, allowing the department's appeal subject to direction in paragraph 14 of the said order. Against the said order, dated 29.06.2018, the petitioner preferred an appeal before the Customs, Central Excise and Service Tax Appellate Tribunal and the said appeal is pending. Therefore, the matters as to the tax liability of the petitioners are subjudice or under judicial consideration; and, unless the disputes before the authorities/Tribunal are resolved finally, the tax liability of the petitioner does not get crystallised even in the event of the success of the department/revenue in the appeals/pending proceedings. Until such time the disputes are resolved in favour of the department, the petitioner cannot be termed as a defaulter in payment of the tax. That apart, as per the tender conditions, the petitioner is required to produce the evidence for filing service tax returns/GST returns and IT returns for past three Financial Years 2015-16, 2016-17 and 2017-18 along with the technical bid. Admittedly, the petitioner's technical bid is approved and the petitioner's tender is declared as L1. The copies of certificates filed along with the material papers, namely, (i) certificate, dated 28.05.2018, issued by the Administrative Officer, Office of the Commissioner of Central Tax, Guntur; (ii) satisfactory-cum-no due certificate, dated 03.05.2019, issued by the Deputy Commissioner, Central Excise, GST, Vijayawada; (iii) experience certificate, dated 08.05.2011, issued by the Additional Commissioner, Customs, Central Excise & Service Tax; (iv) experience certificate, dated 05.01.2015, issued by the Superintendent (PRO), Customs & Central Excise and Service Tax, CR Buildings, Guntur;(v) work experience certificate, dated 07.07.2017, issued by the Superintendent, PRO, HQRS, Office, Guntur; (vi) satisfactory-cum-work experience certificate, dated 30.06.2017, issued by the office of the Assistant Commissioner of Service Tax, Vijayawada; and, (vii) work experience certificates, dated 06.05.2015 & 16.09.2016, issued by Assistant commissioner, Central Excise & Service Tax, Eluru division, clearly lay bare that the petitioner's performance is satisfactory and that he paid PF, ESI, ST etcetera every month and that salaries were also paid through bank accounts regularly, without any interruption. In that view of the matter, the cancellation of L1 tender of the petitioner by the respondents, on the ground that the petitioner is a defaulter in payment of huge amount of tax to the department cannot be held to be valid. In that view of the matter, the cancellation of L1 tender of the petitioner by the respondents, on the ground that the petitioner is a defaulter in payment of huge amount of tax to the department cannot be held to be valid. As a sequel, it must be held that the fresh tender notification issued, on 26.04.2019, is not valid and is sustainable. 10. For the aforestated reasons and as the contentions of the petitioner that the cancellation is not legally valid merits consideration, we find that the petitioner is entitled to the reliefs claimed in the writ petition. 11. In the result, the Writ Petition is allowed as prayed for. As a sequel, respondents 3 & 4 are directed to award, within two weeks from the date of receipt of a copy of this order, work order to the petitioner, in pursuance of the tender notification, dated 07.03.2019, in C. No. I/22/12/2018-Admn, after duly considering the representation, dated 08.05.2019. 12. No order as to costs. 13. As a sequel, pending miscellaneous petitions, if any, shall stand dismissed.