Retailer Can't Be Presumed To Fall Under 'Exceptions' From GST Registration Without Supporting Materials Placed On Record: Gauhati HC

A bench of Justice Sanjay Kumar Medhi observed that though certain entities are given exemption under the Act, there cannot be any presumption in that regard, “more so when the very purpose of the Act of 2017 is to bring all business under the purview of the Act.”

The observation comes in connection with the supplier of a bidder to a tender process for construction of Assam Type Sub-Centre Building under the State's Animal Husbandry & Veterinary Department.

The successful bidder (respondent no.5) initially mentioned the wrong GSTIN of its supplier in the bid, which the Petitioner, an unsuccessful bidder, noticed.

Petitioner contended that a forged document was taken into recourse by respondent no.5 to obtain the tender.

Respondent no. 5 on the other hand submitted that quotation of the GSTIN number was inadvertent as the said shop did not have any GSTIN.

Petitioner in turn contended that such an explanation was wholly unacceptable as no retailer of construction materials, like rod, sand, cement etc. can do business without any GSTIN.

State Counsel referred to Clause 2.A.(d)(ii) of the tender which necessitates GSTIN registration of the bidder. It was submitted that there is no allegation against respondent no. 5 regarding not having a GSTIN registration and therefore, the challenge is not maintainable.

State further relied on Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. and Anr., reported in (2016) and Bharat Coking Coal Ltd. Vs. AMR Dev Prabha & Ors. (2020) to argue that role of the Court is circumscribed in matters relating to tender.

Respondent's counsel also stated that there is no requirement that the supplier is required to have a GSTIN number. It further cited M/S Naga Builders and Suppliers Vs. State of Nagaland & Ors., (2022) to argue that Courts would loath to interfere when a challenge is made by an unsuccessful bidder.

At the outset, the High Court noted that under the Gazette Notification dated 03.06.2019, a person engaged in exclusive supply of goods whose aggregate turnover in a financial year does not exceed to Rs. 40 lakhs is exempted from registration under the Assam GST Act.

However, it was quick to add that nothing was placed on record to show that the supplier, Maa Enterprise, would fall within the exempted clause.

Though the Court refrained from delving into the issue of whether sale of construction materials on huge quantity can be done by an entity without a GSTIN number, in the facts of the case it observed,

“The respondent no. 5 has justified the [bidding] rate by relying upon a quotation from one Maa Enterprise which had given a GSTIN number. It, however, transpires that the GSTIN number did not belong to Maa Enterprise but is of another entity, which is not at all connected. The respondent no. 5 has tried to explain the position by a further clarificatory letter from Maa Enterprise that the said Enterprise did not have any GSTIN number. This Court, however finds force in the contentions advanced on behalf of the petitioner that such explanation is not acceptable inasmuch as the said clarificatory letter does not bear any seal and is not even issued in the letter-head of Maa Enterprise.”

Finding other irregularities in the bid selection, including bias and nepotism, the Court allowed the writ petition and directed that Work Orders be done through eligible bidders.

Appearance: Advocate J Kalita for Petitioner; Sr. Govt. Advocate D Nath for State; Advocate B Chetri for Respondent no.5

Case title: Balen Roy Medhi v. State of Assam

Case no.: WP(C)/1069/2024