A significant ruling of the Karnataka High Court has directed the refund of the Earnest Money Deposit (EMD) by Respondent No. 3 due to the condition of GST payment specified in the tender document.
This petition is filed by the assessee against the tender notification dated 15.11.2018, issued by respondent No.3 inviting bids for various civil works. Condition No.10 of the tender document stipulated that GST would be paid separately on the contract amount in accordance with the Government order dated 10.10.2018. The petitioner participated in the tender process, emerged as the successful bidder, and was issued a letter of intent dated 14.02.2019. In compliance with the letter of intent, the petitioner provided a fixed deposit towards a bank guarantee amounting to Rs.6, 26,310/- to respondent No.3.
Subsequently, respondent No.3 issued a corrigendum dated 25.01.2019, which amended condition No.10 and withdrew the requirement for separate GST payment on the contract amount. The assessee submitted a representation requesting respondent No.3 to retract the corrigendum and honor the original condition for separate GST payment as stated in the initial tender document.
Instead of addressing the representation, respondent No.3 forfeited the earnest money deposit (EMD) submitted by the petitioner, alleging non-performance of the work under the tender notification. Therefore, this petition has been filed.
The tender document mandated separate GST payment on the contract amount as per the Government order dated 10.10.2018. The assessee, has accepted this condition, participated in the tender process and secured the bid. Therefore, respondent No.3’s decision to issue a corrigendum withdrawing this condition, and subsequently forfeiting the assessee’s EMD, constitutes an error.
The assessee did not violate any terms specified in the tender notification. Hence, respondent No.3’s action in forfeiting the petitioner’s EMD amount is deemed arbitrary and discriminatory.
The single bench of Justice Hemant Chandan Goudar held that “ I pass the writ petition is allowed, and respondent No.3 is hereby directed to refund the earnest/EMD money deposited by the petitioner following the tender notification dated 15.11.2018, vide Annexure-A, within a period of three months from the date of receipt of certified copy of this order”.
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