Assembling Parts Does Not Qualify as Manufacturing for MSME Benefits: Calcutta HC Upheld Panorama Electronics' Tender Rejection [Read Order]
Panorama contended that it was not merely an authorized dealer, but a manufacturer assembling cameras and related equipment before supplying them.
In a recent ruling, the calcutta high court rule dthat merely assembling purchased parts does not amount to manufacturing for the purpose of availing MSME benefits.
The writ petition was filed by the petitioner, Panorama Electronics Pvt. Ltd, which had sought relief against the rejection of its bid in a railway tender for video surveillance systems, as the petitioner is not considered by the authority for non-submission of the EMD.
The tender, published in September 2025, required the supply and installation of IP-based Video Surveillance Systems in LHB coaches. Panorama participated as a system integrator but did not deposit the EMD, claiming MSME exemption. The authorities, however, rejected the bid on January 16, 2026, stating that Panorama was not a manufacturer but an authorized dealer, and therefore not entitled to MSME benefits.
Petitioner argued that the exemption from depositing the Earnest Money Deposit (EMD) on the ground that it was a registered MSME unit, and argued that assembling purchased parts into a functional system amounted to “manufacturing activity,” which entitled it to MSME benefits.
Petitioner strengthened their claims with precedents that principal Commissioner of Income Tax v. Jeevan Diesels & Electricals (2018), Candela Engineering Corporation v. Corporation of Trissur (2020). It is also contended that Clause 3 of the tender conditions, which barred dealers from claiming MSME benefits, did not apply to it since it was operating as a manufacturer.
On the other hand respondent acknowledged that Panorama Electronics Pvt. Ltd. was registered as an MSME but argued it had participated in the tender as an authorized dealer, not a manufacturer. They also pointed out that the petitioner was purchasing cameras and related materials from outside suppliers and merely supplying them to the authorities.
Since the company was not creating a new product under its own brand, its activities did not fall within the scope of MSME manufacturing benefits.
After hearing both sides, the high court acknowledged that Panorama Electronics Pvt. Ltd. was registered as an MSME and had disclosed its Udyam Registration Certificate. Noted that Panorama did not supply products under its own brand name, but only in the company’s name.
Also held that the petitioner was not manufacturing any new product and therefore could not claim MSME benefits. It found the authorities were correct in rejecting Panorama’s bid for non-submission of the EMD.
The bench Justice Krishna Rao dismissed the writ petition, and any interim orders previously granted in favor of the petitioner were vacated.
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