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2025 DIGILAW 1096 (TS)

Haque Construction Company v. Union of India

2025-09-24

NAGESH BHEEMAPAKA

body2025
ORDER: NAGESH BHEEMAPAKA, J. Petitioner Company operates in construction sector and had applied for a government contract that required submission of a valid GST Number. To comply with this, Petitioner engaged an agent and paid the fees; however, GST Number provided by the agent was subsequently found to be invalid. During the application for enlistment, Petitioner inadvertently submitted a GST Registration Certificate bearing No. 36ABPPH8480D1Z3. It was later discovered that this GST number was invalid due to an error committed by an external consultant who had been engaged to assist in the GST registration process. In response to this, GST authorities issued show cause notice dated 12-11-2024, warning that Petitioner Company would be penalized unless a proper explanation was submitted. 1.1. In response to show cause notice, Petitioner filed Writ Petition No. 32828 of 2024 which was disposed of on 22-11-2024, permitting Petitioner to submit reply within seven days. Petitioner promptly submitted explanation, which was apparently accepted by the Respondent. Despite permitting rectification of GST Number, the authority issued order dated 14-02-2025, impugned in this Writ Petition, debarring Petitioner Company for one year. Petitioner contends that this is an illogical and contradictory order because while rectification of GST number was allowed, the same order imposed a severe penalty of debarment for one year. Due to this perceived injustice, Petitioner is compelled to approach this Court again. 1.2. It is stated, Petitioner Company currently holds ongoing works and contracts in various States, including Uttar Pradesh, Madhya Pradesh (Bhopal), and other locations. The impugned order thus delivers a major setback and is perceived to be vindictive in nature. Petitioner further asserts that it has no adverse record or black marks in Telangana or any other State in India. The GST Authority’s impugned order is viewed as severely affecting their right to livelihood without justification. 1.3. Petitioner immediately informed the Additional Director General (ADG), Hyderabad, on 26-10-2024, upon becoming aware that GST number submitted with enlistment application was invalid. Petitioner in its representation stated that it was shocked that GST Registration Certificate bearing No. 36ABPPH848-D1Z3, submitted along with the tender Application, was declared invalid. It is emphasized that the entire issue arose because the agent who assisted in obtaining the GST number misled them, resulting in this unfortunate situation for which they are now being penalized. Petitioner in its representation stated that it was shocked that GST Registration Certificate bearing No. 36ABPPH848-D1Z3, submitted along with the tender Application, was declared invalid. It is emphasized that the entire issue arose because the agent who assisted in obtaining the GST number misled them, resulting in this unfortunate situation for which they are now being penalized. Further, Petitioner highlights that it has all-India operations and that imposing such a harsh punishment would be excessively severe. Respondent, after having accepted the correct GST number subsequently provided by Petitioner, illogically imposed the penalty regardless. It is also pointed out that Petitioner has no record of any black marks in any tenders being conducted either in Telangana, Madhya Pradesh, Uttar Pradesh, or Delhi. 1.4. Petitioner states that GST number was rectified later and that this minor error did not cause any major or material harm. The error should be considered an ‘inconsequential error’ or ‘non-essential error’ as established by the Hon’ble Supreme Court in Tata Cellular vs. Union of India, AIR 1996 SC-11 . Hence, the Writ Petition. 2. Respondent filed counter stating that stating that petitioner applied for enlistment under CPWD Class I Buildings & Roads category on line on 29.04.2024 via CEMS portal, submitting various documents including GST registration certificate bearing GST No. 36ABPPH8480D1Z3. Based on this application and supporting documents, petitioner firm was enlisted in Class 1 - Buildings & Roads category as per Office Memorandum dated 19.07.2024. This enlistment was processed under the Rules for Enlistment of contractors in CPWD and is subject to the provisions and regulations stipulated by those rules. According to item No. 2 of the enlistment order dated 19.07.2024, the enlisted contractor must abide by all the rules mentioned in the Enlistment Rules 2023, as amended or latest, which is the Rules for Enlistment of contractors in CPWD, 2024. Further, as per item No. 14(c) of the enlistment application, the firm provided a certification stating that if any information or documents submitted are found incorrect or forged during or after the enlistment process, the Application or enlistment is liable to be cancelled, and the firm shall be debarred for two years from the date of issuance of the order. 2.1. 2.1. On 06.09.2024, the firm submitted on line application through CEMS portal to request changes in its constitution, status and name, which was reviewed and prior approval granted by the Enlisting Authority by letter dated 27.09.2024. In connection with a tender invited by the Executive Engineer, President's Estate, a communication dated 03.10.2024 was received from the ADG, Delhi Office indicating that GST registration of petitioner was invalid as of the last tender submission date. On 07.10.2024, a communication was received via email indicating that a check on the GST portal showed the firm’s GST registration certificate as invalid. According to paragraph 6.6 of the CPWD Enlistment Rules, contractors are required to have a valid GST registration certificate at the time of their enlistment application; however, the GST registration submitted by petitioner was found invalid as of the Application date. Petitioner, through e mail dated 26.10.2024, acknowledged that GST registration certificate provided with enlistment application was invalid as of the Application date and claimed that an individual, who helped with GST registration, allegedly provided a fraudulent certificate, which was then submitted with Application. Petitioner attached a corrected GST registration certificate issued on 27.09.2024 and requested to update the enlistment order by changing the GST registration number. 2.2. Further communications dated 05.11.2024, 23.12.2024 and 13.01.2025 received via e mail from different individuals, indicated that GST registration certificate submitted by petitioner was fake. The respondent emphasizes that every applicant is fully accountable for the authenticity of all the documents submitted with their Application. GST registration certificate provided was a non-existing document on the date of application, constituting violation of paragraph 6.6 of the Enlistment Rules. It remains unclear how a non-existing GST certificate was obtained and submitted as part of the application. By submitting false information and a non-existent document, the firm engaged in falsification of records, meeting the criteria under conditions (d) and (e) of Rule 13.6 of the Enlistment Rules. 2.3. As a result, failure to comply with paragraph 6.6 indicates that the firm no longer met the eligibility criteria at the time of application, which formed the basis for its enlistment, thus also meeting condition (m) of Rule 13.6. Consequently, a show cause notice was issued to petitioner vide letter dated 12.11.2024, requiring a reply within 15 days explaining why disciplinary action should not be initiated under Rule 13.7 of the Enlistment Rules. Consequently, a show cause notice was issued to petitioner vide letter dated 12.11.2024, requiring a reply within 15 days explaining why disciplinary action should not be initiated under Rule 13.7 of the Enlistment Rules. Petitioner filed Writ Petition No. 32828 of 2024) challenging the show-cause notice as arbitrary, illegal, and void, seeking a direction to update the GST registration number and to allow the firm to continue participating in future tenders. The matter was heard and this Court, by order dated 22.11.2024, directed that petitioner be given an opportunity to bring the corrected documents before the respondent within 7 days from 25.11.2024 and that no disciplinary proceedings be initiated before the petitioner is given a fair opportunity to present its case. It was further clarified that any action must be taken in accordance with law as per the CPWD Rules. 2.4. After being afforded this opportunity, petitioner submitted reply to the show cause notice on 29.11.2024 along with supporting documents, including the corrected GST registration document bearing number 36ABPPH8480D1ZE. However, the petitioner failed to adequately address certain critical points raised in paragraphs 4 and 11 of the show cause notice, which substantiated the falsification of GST certificate submitted originally. Therefore, the conditions of Rule 13.6 (d) and (e) are met, making petitioner liable for disciplinary action under Rule 13.7. 2.5. It is stated, as per ER-2023, the work experience required for enlistment in Class-I (B&R) category was completion of building or road work of a minimum magnitude of Rs. 12 crores in one work category. However, on 23.07.2024, the enlistment rules changed to ER-2024, which require an applicant for Class-I (B&R) category to have experience of one completed building work as defined in rules 2.2(i), (ii), or (iii) with a minimum magnitude of Rs. 24 crores in one work category as specified in Table-2 of ER-2024. The department had honored the court Order by considering petitioner’s new GST number and issuing a revised enlistment order dated 10.02.2025 instead of cancelling the enlistment order entirely. Nonetheless, as per CPWD Enlistment Rules, petitioner met the conditions under Rule 13.6 (d) and (e) warranting disciplinary action. Hence, the Disciplinary Authority issued the impugned order debarring petitioner company for a period of one year. It is clarified that during the period from enlistment (17.07.2024) to the date of debarment order (14.02.2025), petitioner was not prevented from participating in tenders of the enlisted Class-I category. Hence, the Disciplinary Authority issued the impugned order debarring petitioner company for a period of one year. It is clarified that during the period from enlistment (17.07.2024) to the date of debarment order (14.02.2025), petitioner was not prevented from participating in tenders of the enlisted Class-I category. 2.6. It is stated, Petitioner claims that an external agent was responsible for the invalid GST certificate; however, as per the process, the GST certificate confirmation is sent directly to the applicant’s registered mail and mobile number and no role of third-party agents is recognized by CPWD for enlistment. Petitioner remains fully accountable for the authenticity of all documents submitted. Thus, the claim of error due to an external consultant or agent is denied. Respondent clarifies that the department complied with the High Court’s direction by considering petitioner’s corrected GST number and issuing a revised enlistment order dated 10.02.2025, rather than cancelling the enlistment. It is further clarified that the period of debarment starts from the date of issuance of debarment order and will be deemed revoked automatically upon expiry of the specified period. Importantly, contracts concluded prior to the debarment order remain unaffected by this decision, and debarment does not affect any other contractual or legal rights of the procuring entities. 3. Heard Sri Mir Mohd. Naser Ali, learned counsel for petitioner as well as learned Deputy Solicitor General on behalf of respondent. 4. It is to be noted that on earlier occasion, respondent authority issued a show cause notice to petitioner for furnishing invalid / false information with regard to GST, pursuant to which petitioner approached this Court in Writ Petition No. 32828 of 2024, dated 22.11.2024, whereupon this Court directed the Authority to consider the corrected details/correct certificate furnished by petitioner for enlistment as PWD contractor as per law. However, respondent authority, vide impugned order, points out to paragraphs 4 and 11 of the Enrolment Application which are declaratory statements pertaining to the action on furnishing false/ incorrect information. 5. At this juncture, it is to be noted that this Court in Paragraph No.3 of the order dated 22.11.2024 in Writ Petition No. 32828 of 2024 directed as follows: “ 3. Considering the fact that the petitioner’s GST Registration Certificate was subsequently corrected, the petitioner shall be given an opportunity to bring the corrected documents before the respondent within 7 days from 25.11.2024. Considering the fact that the petitioner’s GST Registration Certificate was subsequently corrected, the petitioner shall be given an opportunity to bring the corrected documents before the respondent within 7 days from 25.11.2024. The respondent shall consider these documents and take appropriate action on these documents. The respondent shall not initiate any disciplinary proceedings against the petitioner before the petitioner is given sufficient opportunity to present its case along with the corrected documents before the respondent….” 6. It is to be noted that petitioner admittedly, submitted the corrected documents regarding his GST Certificate, therefore, respondent ought to have considered his eligibility for enlistment based on the valid/corrected documents submitted by petitioner. Once petitioner furnished the corrected/valid particulars, there can be no further haunting by pressing into service the clauses relating to earlier incorrect filing, that was the subject matter of earlier Writ Petition in which a direction was passed by this Court. 7. In that view of the matter, the impugned debarment order dated 14.02.2025 is set aside and respondent authority is directed to consider the candidature of petitioner for enlistment as PWD contractor, based on the documents furnished by them, without reference to the aspect of previous certificate furnished by them. 8. With this, the Writ Petition stands allowed. No costs.