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Yogesh Nagpure (Lawyer)     01 August 2016

Value of work executed for project

Dear Sir

Selecting the non-qualified contactor in the tender process despite the contractor does not fulfil the eligibility criteria and is not eligible to be selected.

Qualifying requirements: -

Experience of having successfully completed similar works during last 7 years ending last day of month previous to the one in which applications are invited should be :- "One similar completed work each costing not less than the amount equal to 80% of the estimated cost"

Estimated cost of Rs.8163763 should be considered for Q.R.

The value of actual work completed is Rs. 60, 42, 575/-

Adding service Tax, Education Cess, SHE Cess (Rs. 7,46,862) which is dierctly paid to the respective concrened departmnet by the client i.e. Govt. Undaertaking company.  The total value comes out to be 67,89,437/-.

These Taxes are never paid to the contractor.


While considering the contractor for qualifying requirement, which value should be considered as value of work executed.



 3 Replies

G D Rajan (Advocate - High Court Madras)     01 August 2016

In my opinion, if Taxes are going to be paid by the Contractee. i.e if the Contractor need not pay, then the estimate cost should exclude tax. However, recheck the tender document. If anywhere that mentions the parameters for submitting the project cost and anywhere the tax term is used.

In the above case, 80% of  8163763 amounts to 6531010/- 

Otherwise you should rely on the following that, under normal terms, estimated cost should include the tax parameter as well.

You should mention with a note about the tax exemption in the previous contract. Because, Tax is a pass over parameter, which suppose to observed as the obligation of the actual buyer and the government. 

There are few judgments which reference to the cost and rate index that includes tax as cost.

Good Luck!

Yogesh Nagpure (Lawyer)     03 August 2016

Dear Sir

Thanks a lot for guidence. can you help me any good ruling of apex court since the bombay high court has dismissed my petition on the ground that total value of work executed shall be considered along with service tax.

Actually the situation is that the PSU has paid only an amount of Rs. 60,00,000 to the contractor. rest taxes are deposited by PSU directly to the government. TDS is also deducted on 60,00,000 only.

Thanks and regrads

G D Rajan (Advocate - High Court Madras)     03 August 2016

Dear Yogesh

If the case is already dismissed. It is quite difficult to get it back in favor. Because, for Appeal, we really need to break it on technical grounds, which might be quite difficult.  I only could see judgements more of dismissal than recognising disqualified bidders at later stage. Especially, not able to answer the technical grounds for disqualification.

But, there are few arguments, which could be applied over the arrival of estimation cost and cost of completed works. But, we need a document evidence from both, the past and present tender documents, Dismissed order.  Especially to arrrive at a logicial question of splitting the estimated cost of both the present project and past project. (Tender eligilibility and Award documents) To refer to Estimated Cost, Rate of Index, Schedule of Rates, & Tax rates etc if any.

Case references.  - estimated cost includes excise duty.. - 
It is stated that along with the 1995 Schedule of rates, 4.9% sale-tax are to be added and carriage charges and increase in cost index are to be taken into consideration while preparing the justified estimate. - Though this is the matter to be determined by the decision making authority and the power of judicial review is very limited, the law laid down by the Supreme Court is clear in Tata Cellular v. Union of India, 1994 (6) SCC 651, that the power of judicial review is available to the Court in case the decision made by the authority is arbitrary or not in conformity with the terms and conditions. The Supreme Court, in Tata Cellular case, has held that it was obliged to interfere on the ground of arbitrariness and violation of principles of natural justice, confining itself to the doctrine of judicial restraint, however, by the application of permissible parameters to set right the decision-making process. Negative.

Note: My comments are not based on any of your documents, hence cross check these cases about the applicability of the subject matter. Good luck.


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