No. 2 v. No. 1 herein)

6. In order to buttress its above submissions, the writ petitioner-responde nt No. 1 herein also contended, in the writ petition, that none of the tenderers had submitted ’sales tax clearance certificate’ and what the appellant had subm itted was also a VAT clearance certificate and not a ’sales tax clearance certif icate’ and, hence, the rejection of the tender of the writ petitioner-respondent No.1, on the ground of non-furnishing of ’sales tax clearance certificate’, was illegal and unjustified. The writ petitioner-respondent No.1 further contended, in the writ proceeding, that a VAT registration certificate had been furnished by the writ petitioner-respondent No. 1 along with a copy of the permission, gra nted by the Superintendent of Taxes, allowing the writ petition-respondent No. 1 to pay composition amount of the VAT payable by the writ petitioner-respondent No. 1 on civil work, executed by the writ petitioner-respondent No.1, and this c ertificate was sufficient compliance of the requirement of furnishing of ’sales tax clearance certificate’ and, hence, in the light of these facts, the State re spondents/authorities concerned ought not to have denied the allotment of the co ntract to the writ petitioner-respondent No. 1 by contending that the writ petit ioner-respondent No. 1 had not furnished the requisite ’sales tax clearance cert ificate’ despite the fact that the writ petitioner-respondent No.1 was the lowes t valid tenderer inasmuch as the lowest tenderer’s tender had been found, as alr eady indicated above, non-responsive and invalid.

7. The contentions of the writ petitioner-respondent No. 1 found favour wit h a learned Single Judge of this Court inasmuch as the learned Single Judge, ref erring to the decision, in Global Energy Ltd. V. MS Adani Export Ltd. (AIR 2005 SC 2653) and Bidhu Bhusan Choudhury V. Union of India, reported in 2000 (1) GLT 342, observed that the rejection of the writ petitioner’s tender as invalid on t he ground of omission to give complete description of the pledging authority, in the pledging documents, is not justified and is illegal inasmuch as the postal authority had, later on, clarified that the document, in question, stood pledged in favour of the Inspector General of Prisons, Assam. In so far as the requirem ent of furnishing of the ’sales tax clearance certificate’ was concerned, the le arned Single Judge took the view that the tender documents did not require furni shing of VAT clearance certificate and, in the absence of VAT clearance certific ate, the writ petitioner’s tender could not have been treated as invalid and as far as ’sales tax clearance certificate’ is concerned, since none of the tendere rs had produced ’sales tax clearance certificate’, the rejection of only of the writ petitioner’s tender, on the ground of non-submission of ’sales tax clearanc e certificate’, was wholly unjustified. The relevant observations, made by the l earned Single Judge, in arriving at the findings aforementioned, are reproduced below: (cid:28)16. The arguments advanced by the rival counsels indicate that the d ispute in the present case can be resolved by answering as to whether the tender of the petitioner could be considered invalid because of his failure to supply a Sales Tax Clearance Certificate and whether under Clause 7 (a) , a tenderer is required to furnish a of VAT clearance certificate instead of a Sales tax clear ance certificate and on that basis their tenders are accepted for consideration, whereas the petitioner’s tender has not been considered, due to non submission of the Sales Tax Clearance certificate which according to the Purchase Committee is required to be submitted as per Clause 7(a) of the tender notice.

17. Even on a prima facie reading of Clause 7(a) it can be gathered that the re is no requirement of furnishing a VAT tax clearance certificate under such ci rcumstance in my view, the petitioner could not have been considered to be a inv alid tenderer under Clause 7(a), for non furnishing of a VAT clearance certifica te as that was not stipulated in any of the clauses of the tender notice. In any case from the proceeding of the departmental Purchase Committee held on 17/11/0 9(Annexure- G), the petitioner’s tender was rejected for not furnishing a Sales Tax Clearance Certificate. As his tender was considered invalid for non submission of the Sales tax clearan ce certificate and since none of the tenderers have produced Sales Tax Clearance certificate, their rejection only of the petitioner’s tender on this ground has to be declared as unjustified. In this context the reference to Section 8 of the General Clauses Act by Mr. Cha liha in my considered view has no application in as much as in the case in hand , the Court is not scrutinizing a provision of any enactment but is examining th e purport of a tender clause only. *** 18. *** *** *** *** ***

19. Selection of a party to execute a supply work through tender process would n ormally require selection of the party who has quoted the lowest price and in th is case the petitioner’s quotation was lower than the respondent No.4 to whom th e work order was issued. Considering the lower quotation of the petitioner, he h as a better right in my view to secure the contract in question and under such c ircumstances the work order granted in favour of the respondent No.4 is declared to be illegal. (cid:29)

8. The learned Single Judge, thus, held that though the tender of the writ petitioner was considered invalid for non-submission of the ’sales tax clearance certificate’, the fact remains that when none of the tenderers had produced the ’sales tax clearance certificate’, rejection of the writ petitioner’s tender al one, on the said ground, was unjustified. The learned Single Judge further held that the work, allotted in favour of the appellant, was illegal inasmuch as the writ petitioner’s quoted rate for supply of blanket was lower than that of the a ppellant and the writ petitioner, therefore, had a better right to secure the co ntract, in question. Aggrieved by the decision so reached in the writ petition, the unsuccessful tenderer, who stood impleaded as respondent No. 4 in the writ p etition, has preferred this appeal.

9. We have heard Dr. AK Saraf, learned Senior counsel, appearing on behalf of the appellant, and Mr. S Kataki, learned counsel for the writ petitioner-resp ondent No. 1. We have also heard Ms. B Goyal, learned Government Advocate, appea ring on behalf of the State respondents.

10. Assailing the decision reached in the writ petition, Dr. Saraf, learned Senior counsel, submits that the learned Single Judge’s finding, that Clause 7(a ) of the tender notice did not require VAT clearance certificate, is erroneous i nasmuch as sales tax is collected by the State by virtue of Entry 54 of List II of the Second Schedule of the Constitution of India and both, the AGST Act, 1993 , as well as the VAT Act, 2003, have been enacted by taking recourse to Entry 54 of List II as aforementioned. Dr. Saraf contends that any tax, collected by tak ing recourse to any of the said two enactments, namely, the AGST Act, 1993, as w ell as the VAT Act, 2003, is nothing, but collection of sales tax and the ’sale s tax clearance certificate’, in the context of the facts of the present case, m eans a certificate from the competent authority evidencing clearance of tax on s ales. Dr. Saraf points out that the writ petitioner-respondent No. 1 had not sub mitted VAT registration certificate as is warranted in respect of normal sales, but what the writ petitioner-respondent No.1 had submitted was a VAT registratio n certificate under the scheme of composition of tax pertaining to works contrac t executed by the writ petitioner. Such a registration, contends Dr. Saraf, had no relevance whatsoever in the present case, wherein the transaction amounted to sale of woolen blankets by the selected tenderer to the State respondents/autho rities concerned and the purchase thereof by the State respondents/authorities c oncerned.

11. Assailing the finding of the learned Single Judge to the effect that the writ petitioner’s quoted rate for supply of blankets was lower than that of the appellant, Dr. Saraf points out that as per Clause 17 of the tender conditions, the tenderers were required to quote their rates inclusive of all taxes and cha rges. Drawing our attention to the tender documents of the writ petitioner, whic h formed part of the writ petition, Dr. Saraf points out that these documents cl early reveal that the rate, quoted by the writ petitioner, did not include VAT p ayable on the woolen blankets offered to be supplied. Dr. Saraf further points o ut that since the woolen blankets are taxable @ 4% and if the element of tax, so payable, is taken into consideration, the rate, quoted by the writ petitioner, would become higher than that of the appellant, but this aspect of the case appe ars to have completely escaped attention of the learned Single Judge while takin g the view that the writ petitioner-respondent No.1 herein was the lowest valid tenderer. The learned Single Judge, thus, according to Dr. Saraf, fell into error 12. in not taking into account the fact that the tender notice required quoting of r ate by the tenderer inclusive of VAT and since the writ petitioner had not inclu ded, within its quoted rate, the VAT, which was payable on supply of blankets th e writ petitioner’s quoted rate could not have been taken to be lower than that of the appellant, particularly, when the addition of the tax element of 4% would clearly make the writ petitioner’s quoted rate much higher than that of the app ellant. Dr. Saraf contends that since the writ petitioner had violated the essen tial conditions of the tender notice by not submitting the ’sales tax clearance certificate’ and by quoting a rate, for supply of blankets, without including, w ithin its quoted rate, the taxable element of 4% payable as VAT, the State respo ndents/authorities concerned were wholly justified in rejecting the tender of th e writ petitioner and the learned Single Judge, in the face of such glaringly no ticeable facts and the law relevant thereto, committed manifest error of law in allowing the writ petition and in setting aside the award of contract, in questi on, made in favour of the appellant. As far as the learned Single Judge’s findin g in respect of pledging of the ’earnest money’ is concerned, this finding has n ot been assailed before us.

13. Resisting the above submissions, made on behalf of the appellant, Mr. S Kataki, learned counsel, appearing on behalf of the writ petitioner-respondent N o. 1 herein, submits that no issue, as regards non-furnishing of appropriate VAT registration certificate, had been raised in the writ petition and the appellan t may not, therefore, be permitted, now, to raise this issue in the present appe al. So far as the non-submission of the ’sales tax clearance certificate’ is con cerned, Mr. Kataki submits that in the tender notice, since the condition impose d was submission of ’sales tax clearance certificate’, whereas the AGST Act, 199 3, already stood repealed, fulfillment of such a condition was an impossibility and could not have, therefore, been insisted upon or taken as a ground for rejec ting the writ petitioner’s tender, particularly, when other tenderers too, inclu ding the appellant, had not submitted any ’sales tax clearance certificate’. Mr. Kataki further submits that since the tender notice did not require submission of VAT clearance certificate, the condition of furnishing of VAT clearance certi ficate and/or the ’sales tax clearance certificate’ could not have been read, an d ought not to be read, into the terms and conditions embodied in the tender not ice. Mr. Kataki contends that in a tender process, there cannot be any implied t erm and a Notice Inviting Tender cannot be interpreted on the basis of what the authorities might have intended and that the requirement of law is that the con ditions, incorporated in a Notice Inviting Tender, must be read as they appear i n the Notice Inviting Tender. In support of his submissions, Mr. Kataki places r eliance on Commr. of Police v. Gordhandas Bhanji (AIR 1952 SC 16).

14. Controverting the submissions made on behalf of the appellant that since the rate, quoted by the writ petitioner, was not inclusive of VAT, the same was not in conformity with the conditions of the tender notice and if the element o f VAT payable was taken into account, the rate, quoted by the writ petitioner-re spondent No. 1, would become higher than the rate quoted by the appellant, Mr. K ataki submits that there was a declaration by the writ petitioner, in the tender documents, that the writ petitioner would abide by all the terms and conditions of the tender notice and, hence, even though the rate, quoted by the writ petit ioner, was exclusive of VAT, the said declaration given by the writ petitioner s hall be construed to mean that the rate, which had been quoted by the writ petit ioner, was a rate inclusive of VAT and not exclusive of VAT even though the writ petitioner had mentioned, in the tender documents, that its offered rate was ex clusive of VAT. As regards the appellant’s contention that appropriate VAT registration 15. certificate was not submitted by the writ petitioner with the tender documents, Mr. Kataki contends that the requirement, under the tender notice, was submissio n of VAT registration certificate and it does not really matter whether the VAT registration certificate, in question, which the writ petitioner had submitted, was under a scheme of composition of tax or in respect of regular sales of goods by the writ petitioner. Mr. Kataki further submits that it is true that the VAT registration certificate, issued to the writ petitioner, was under the scheme o f composition of VAT payable and the same relates to a works contract; but even supply of woolen blankets, according to Mr. Kataki, can be classified as a works contract and, hence, the submission of VAT clearance certificate, granted under the scheme of composition of tax payable in respect of works contract, was a su fficient compliance of the conditions of tender notice. 16. Referring to an affidavit filed by the writ petitioner, in the present a ppeal, taking some additional grounds, Mr. Kataki submits that in terms of Claus e 6 of the tender notice, an intending tenderer was required to deposit ’earnest money’ equivalent to 2% of the estimated value of the articles to be supplied. The appellant, however, contends Mr.Kataki, submitted ’earnest money’ in respect of its quoted price of Rs. 271/- only, but did not deposit ’earnest money’ in r espect of its quoted price of Rs. 235/- and/or of Rs. 289/- and the appellant ha d, thus, not, according to Mr. Kataki, fulfilled the essential condition of the tender notice, but this aspect, submits Mr. Kataki, could not be agitated in the writ petition by the writ petitioner. On totality of the circumstances, therefo re, the writ petition, contends Mr. Kataki, has been justifiably allowed and the decision, reached therein, may not, submits Mr. Kataki, be interfered with. Appearing on behalf of the State respondents/authorities concerned, Ms. 17. Goyal, learned Government Advocate, submits that the essential conditions of the tender notice had not been complied with by the writ petitioner as indicated ab ove and, hence, the rejection of the writ petitioner’s bid was wholly correct an d justified and the interference, in the writ petition with the decision to awar d the contract, in question, in favour of the appellant, was not called for and may, therefore, be corrected in this appeal. 18. Repelling the submissions made on behalf of the writ petitioner-responde nt No.1, Dr. Saraf submits that a VAT registration certificate, under the scheme of composition of VAT payable for execution of works contract, cannot be equate d to the normal sale and supply of woolen blankets, for, supply of woolen blanke ts, according to Dr. Saraf, is not a works contract. Dr. Saraf contends that the VAT registration certificate, which the writ petitioner had submitted, suffered from two incurable defects inasmuch as the VAT registration certificate, submit ted by the writ petitioner, was not the normal certificate of registration evide ncing registration of the appellant as a dealer as envisaged in the VAT Act, 200 3, for sale of goods and, secondly, the VAT registration certificate, which the petitioner had submitted, was in respect of works contract, which is different f rom normal sale and supply of materials, such as, supply of woolen blankets. Th us, according to Dr. Saraf, the VAT registration certificate, granted to the wri t petitioner under the provisions of composition, is not a normal VAT registrati on certificate and, more so, when such registration certificate relates to works contract, the certificate, so produced, cannot cover a work of normal sale and supply of materials, such as, woolen blankets. As regards the submission of Mr. Kataki that the appellant had quoted th 19. ree different rates, but had paid ’earnest money’ of 2% on the price of woolen b lanket, which was quoted @ Rs. 271/- per blanket, Dr. Saraf points out that the appellant had quoted three different rates for three different qualities of wool en blankets and deposited ’earnest money’ of 2% on the price of woolen blanket, which was Rs. 271/-. As the respondents/authorities concerned have awarded the c ontract in favour of the appellant in respect of woolen blankets of Rs. 235/- pe r blanket, the ’earnest money’, deposited by the appellant, covered the total va lue of the contract awarded to the appellant and the appellant has, thus, fulfil led the requisite condition of tender notice and the selection of the appellant, by the State respondents/authorities concerned, for awarding of the contract, i n question, was in accordance with the law.

20. Upon hearing the learned counsel for the parties, the first issue, which attracts our attention, is: Whether a new plea, as has been raised by both the parties, can be allowed to be raised in a writ appeal. A writ appeal is really n ot a statutory appeal preferred against the judgment and order of an inferior co urt to the superior Court. The appeal inter se in a High Court from one Court t o another is really an appeal from one co-ordinate Bench to another co-ordinate Bench and it is for this reason that a writ cannot be issued by one Bench of the High Court to another Bench of the High Court. Thus, unlike an appeal, in gene ral, a writ appeal is an appeal on principle and, that is why, unlike an appeal, in an ordinary sense, such as, a criminal appeal, where the whole evidence on r ecord is examined anew by the appellate Court, what is really examined, in a wri t appeal, is the legality and validity of the judgment and/or order of the Singl e Judge and it can be set aside or should be set aside only when there is a pate nt error on the face of the record, or the judgment is against the established o r settled principle of law. If two views are possible and a view, which is reas onable and logical, has been adopted by a Single Judge, the other view, howsoeve r appealing such a view may be to the Division Bench, it is the view adopted by the Single Judge, which should, normally, be allowed to prevail. Though a writ appeal is an appeal in principle, as indicated hereinbefore, the fact remains th at a writ appeal too is an appeal and is, therefore, a continuation of the origi nal order passed in exercise of writ jurisdiction by a Single Judge of this Cour t and, thus, when a writ appeal is continuation of the original proceeding, ther e is no absolute bar in allowing new pleas to be taken in a writ appeal, particu larly, when such a plea is of law and can help the Court reach a correct decisio n in the appeal and also when a new plea relates to such facts, which are not di sputed and are already available on record and can help the Court in deciding th e appeal completely and effectively. This apart, a writ appeal being a continuat ion of the original order, the decision, in a writ petition, does not operate as an estoppel for either party in raising a question of law or in placing relianc e on a document or paper already available on record. A reference may, in this regard, be made to the case of Bongaigaon Refinery and Petrochemicals Limited v. Girish Chandra Sharma, reported in (2007) 7 SCC 206, wherein the Supreme Court has held that a writ appeal is a continuation of the original order passed in th e writ petition by a Single Judge and the findings, recorded in a writ petition, cannot operate, in a writ appeal, as estoppel against the party concerned. The relevant observations, appearing in this regard, in Bongaigaon Refinery and Petr ochemicals Limited (supra), read as under: (cid:28)Since the writ appeal is in continuation of the original order passed in the wr it jurisdiction by the learned Single Judge, it cannot operate as an estoppels a gainst learned counsel for the respondent to press the same. If the finding reco rded by the inquiring officer is not sound and it relates to perversity then the appellate court in writ appeal cannot estop the counsel from raising the same. More so, the Division Bench after considering the matter has found that the whol e approach was perverse because the respondent alone has been made a scapegoat. When the decision of all the three Committees was unanimous, then to take one an d put the entire blame on him is definitely perverse approach and the court cann ot stand to the technicalities so as to defeat the ends of justice. (cid:29)

21. In the present case, paragraph 11 of the judgment and order, under appea l, shows that the writ petitioner, by referring to the VAT registration certific ate, which had been granted in respect of ’works contract’ and also the permissi on, granted to the petitioner by the Superintendent of Taxes to pay composition amount of tax, submitted that the writ petitioner’s tender ought not to have bee n treated as invalid by the State respondents/authorities concerned on the groun d that the writ petitioner had not furnished ’sales tax clearance certificate’.

22. When, as indicated above, the said VAT registration certificate as well as the permission granted by the Superintendent of Sales Tax enabling the writ p etitioner to pay a composition amount of tax, which have been referred to, and r elied upon, by the writ petitioner in support of its case, the appellant cannot be really stopped from raising the issue, namely, (i) whether the said registrat ion certificate was an appropriate registration certificate as envisaged by the tender notice and (ii) whether a payment, made under the composition scheme, as indicated hereinbefore, amounts to a ’tax clearance certificate’ ? The objectio n, raised, in this regard, by Mr. Kotoky, that the appellant has raised a new pl ea, cannot, therefore, hold water. Since it is necessary for us to examine, in the factual scenario of the 23. present case, the appellant’s plea as to whether the VAT registration certificat e, furnished by the writ petitioner, was an appropriate VAT registration certifi cate in the context of the terms and conditions of the tender notice at hand, or not, we would also examine the plea of the writ petitioner-respondent No. 1 her ein to the effect that the appellant had not fulfilled the conditions of the ten der notice inasmuch as the appellant had not deposited the ’earnest money’ as re quired by the tender notice.

24. Before proceeding to examine the rival contentions of the parties, we ne ed to point out that judicial review means court’s power to review the action of other branches or levels of the Government. In the judicial review of a contra ctual matter, the writ court will not sit as a, appellate court or as an appella te forum over the decision of the authorities concerned to award the contract in favour of any tenderer unless the decision making process is unfair, non-transp arent, arbitrary, motivated, biased, or contrary to the provisions of law and/or public interest. Judicial review, in such a case, is not against the decision, but the decision-making process. So long as it is found that an administrative decision has been reached by taking into consideration all such factors, which were relevant, and by keeping excluded from the purview of consideration all suc h factors, which were irrelevant, the decision cannot, ordinarily, be interfered with by taking recourse to Article 226 of the Constitution of India unless the decision suffers from infraction of law. Judicial review is aimed at preventing arbitrariness and favouritism and is required to be exercised in larger public interest, or, when a decision, brought to the notice of the Court, reveals that the power has been exercised for a collateral purpose. 25. It is also well settled that essential conditions of a notice inviting t ender must be adhered to by all the tenderers and if there is no power of genera l relaxation, no relaxation shall be granted. It can also not be in dispute tha t the principle of strict compliance would be insisted, where it is possible for all the parties to a tender process to comply, fully and completely, with a giv en condition, particularly, when the condition is mandatory in nature. Whether any condition, or part thereof, embodied in a notice inviting tender, is an esse ntial condition or not, shall have to be examined bearing in mind the object, wh ich is sought to be achieved by the condition so imposed. There can also be no doubt that an authority would, ordinarily, be fully justified in rejecting a ten der if the tenderer does not fulfill the conditions required for submission of a valid tender. Insistence upon fulfillment of the conditions, embodied in a ten der notice, ensures quality in the tenderers and the deletion of any condition(s ) or relexation of any condition(s), in favour of any tenderer, would, ordinaril y, result in discrimination not merely amongst the tenderers, but also amongst t he persons, who would have applied and/or participated in the tender process, ha d they known that such a relaxation would be permitted [See TATA Cellular vs. Un ion of India, reported in (1994) 6 SCC 651, and Asia Foundation & Construction L imited vs. Trafalgar House Construction (I) Ltd., reported in (1997) 1 SCC 738]. 26. In the above backdrop of the ambit and scope of judicial review in contr actual matters, we, now, turn to the question as to whether the requirement of f urnishing of a ’sales tax clearance certificate’, in the tender process, in ques tion, would mean VAT clearance certificate, because the Assam General Sales Tax Act, 1993, stood repealed and replaced by enactment of the Assam Vat Act, 2003, on the date of the floating of the present tender notice. For the purpose of re aching a correct decision on this aspect of the appeal, it is, to our mind, nece ssary to clearly understand as to what VAT means and what difference, if any, li es there between VAT, on the one hand, and Sales Tax, on the other.

27. VAT is a tax on every sale with a facility of set off on tax paid on pur chases. Value Added Tax (VAT) is the tax levied by a State Government on sale or purchase of goods within the State and by its very nature, VAT is an indirect t ax on sale of goods, which is recovered from the buyer by the seller, and the ta x, so collected by the seller, is deposited in the account of the State Governme nt. The globalization of trade, investment and services necessitated reforms in the economic structure of the State. VAT is the modern system of indirect tax, w hich has been adopted by a large number of countries to avoid cascading effect o f the earlier existing system of sales tax. Thus, VAT is nothing, but a modern a nd transparent tax system that has replaced the earlier system of payment of sal es tax in order to eliminate the cascading effect of sales tax. VAT is a multi-s tage tax, which is levied every time the commodity changes hands, but only on th e incremental value added at each stage unlike the turnover tax, which is levied on the gross turnover of a dealer. VAT produces a yield equivalent to that of a single stage retail sales tax. Since the sum of the value added, at each succe ssive stage, is equal to the final value or price of a commodity or service, the sum of tax collected, at the successive stages, will be equivalent to the tax, which would be payable if it were to be charged once on the final value or pric e of the produce. Section 2(56) of the Assam VAT Act, 2003, defines VAT to mean a tax on sale of any goods, at every point, in the series of sale made by the re gistered dealer, with the provisions of credit of input tax paid at the points o f previous purchase thereof. In short, VAT is nothing, but a modern system of sa les tax. What now, needs to be noted is that both, the Assam General Sales Tax Ac 28. t, 1993, and the Assam Value Added Tax Act, 2003, are fiscal legislations made b y taking recourse to Entry 54 List II of Seventh Schedule of the Constitution of India, which deals with taxes on sale or purchases of goods. Not only that the AGST Act, 1993, was enacted by taking recourse to Entry 54 List II of the Sevent h Schedule of the Constitution of India, but even the Assam VAT Act, 2003, has b een enacted by taking recourse to Entry 54 List II of Seventh Schedule of the Co nstitution of India. Thus, the VAT Act aims at levying tax on sale or purchase of goods inside the State. Whatever may be the nomenclature of the Act, whether the Assam General Sales Tax Act, 1993, or the Assam Value Added Tax Act, 2003, t he fact remains that it is a tax on a sale or purchase of the goods and the same , therefore, is nothing, but a sales tax. Even the preamble to the Assam Value A dded Tax Act, 2003, states that it is an Act to provide for imposition and colle ction of tax on the sale of goods in the State of Assam and for matter connected therewith and incidental thereto. Hence, the finding of the learned Single Jud ge to the effect that there was no requirement of furnishing of VAT clearance ce rtificate and though the other tenderers had furnished VAT clearance certificate instead of ’sales tax clearance certificate’, yet none of the tenderers having furnished ’sales tax clearance certificate’, the rejection of the writ petitione r’s tender on the ground of non-submission of ’sales tax clearance certificate’ was unjustified, is, we regret, erroneous. The learned Single Judge has proceede d on the basis that a ’sales tax clearance certificate’ was something different from a VAT clearance certificate thereby failing to take note of the fact that V AT is also a sales tax and it is only the system of levy that has undergone chan ge and not the nature of tax.

29. Coupled with the above, we may turn to Clause 7(a) of the Tender Notice, which had set out the requirement of submission of ’tax clearance certificate’. Clause 7(a) of the Tender Notice reads as under: (cid:28)7(a) All tender must be accompanied by up to date Income Tax/VAT Registration C ertificate/Sales Tax clearance certificate including PAN Card. (cid:29)

30. From a bare reading of Cause 7(a) of the Tender Notice, it becomes clear that the conditions, embodied therein, nowhere, speaks of ’sales tax clearance certificate’ under the Assam General Sales Tax Act, 1993, alone. It simply speak s of a condition of furnishing of ’sales tax clearance certificate’. The require ment of furnishing of ’sales tax clearance certificate’, in the context of the l aw, in force, means that there is no outstanding amount of sales tax due to the State from the person holding the certificate. The requirement of furnishing of ’sales tax clearance certificate’ cannot, in the present case, be construed to m ean a ’sales tax clearance certificate’ issued only under Assam General Sales Ta x Act, 1993. The object and purport of the condition, embodied in clause 7(a), requiring a tenderer to furnish ’sales tax clearance certificate’ ought to be ke pt in mind, while interpreting the term ’sales tax clearance certificate’, which appears in clause 7(a). In short, thus, the requirement, under Clause 7(a), was to furnish a certificate evidencing that no tax, arising out of sale or purchas e of goods, has remained due and payable by the tenderer, as a dealer, under a s tatute made by taking recourse to Entry 54 List II of the Seventh Schedule of th e Constitution of India. 31. Turning to the finding of the learned Single Judge that the writ petitio ner had quoted a rate, which was lower than that of the appellant herein and the writ petitioner had, therefore, a better right to secure the contract, in quest ion, it is imperative that we closely examine Clause 17 of the Tender Notice. T his Clause (Clause 17) reads as under: (cid:28)17. The rate quoted in the tenders shall be inclusive of all other taxes and ch arges leviable by Government and the tendered rates must confirm to the units of measurement and other specification indicated in the tender notice, which shall be in terms of prevailing units of measurement etc. (cid:29)

32. From a bare reading of what Clause 17 embodies, it becomes transparent t hat Clause 17 imposes the condition on the indending tenderers to quote their ra tes inclusive of taxes as well as charges leviable by the Government. As discer nible from the writ petitioner’s own letter, dated 20.10.2009, annexed to the wr it petition, the writ petitioner’s quoted rate was Rs. 234/-, per woolen blanket , with a note, which read, (cid:28)all rates are excluding VAT. (cid:29) This shows that the w rit petitioner’s quoted rate of Rs. 234/-, per blanket, did not include the VAT payable. On the other hand, the rate, quoted by the appellant and on the basis whereof, the contract has been awarded to the appellant, was Rs. 235/-, which wa s inclusive of VAT. Admittedly, woolen blankets are taxable @ 4 paise in a rupe e under the Assam Value Added Tax Act, 2003. On the price of Rs. 234/- per blan ket, the VAT payable, if added to the offered rate of the writ petitioner, would raise the offer of the petitioner to the tune of Rs. 243.36/- per blanket. Th e fact that the writ petitioner’s quoted rate of Rs. 234/-, per blanket, would r ise to Rs. 243.36/-, if VAT is added thereto, has not been disputed, before us, on behalf of the writ petitioner-respondent herein. Viewed in this light, it be comes crystal clear that the rate, quoted by the writ petitioner-respondent No. 1, of Rs. 234/-, per blanket, which was exclusive of VAT, cannot be said to be l ower than the rate quoted by the appellant or the rate at which the appellant ha d offered to make supply of blankets. The submissions made, in this regard, by Mr. Kataki, to the effect that notwithstanding the rate, quoted by the writ peti tioner to be exclusive of VAT, the same should be considered to be inclusive of VAT, because, there is a declaration, in terms of the tender notice, that the wr it petitioner would abide by all the terms and conditions of the NIT, cannot but rejected inasmuch as a tender process would become arbitrary if mere declaratio n, given by a tenderer, that he would comply with all the terms and conditions o f a notice inviting tender, is treated as sufficient compliance of all the terms and conditions incorporated in a notice inviting tender. Such a declaration, i f relied upon, would frustrate the very purpose of calling of tenders by imposin g certain essential conditions. By quoting a rate ’exclusive of VAT’, the writ petitioner had not only failed to fulfill the terms of the tender notice, but it also goes without saying that since the writ petitioner had itself mentioned it s rate as ’exclusive of VAT’, the rate, quoted by the writ petitioner, shall hav e to be calculated by taking into account the element of VAT. On taking into ac count the element of VAT, when the rate, quoted by the writ petitioner, becomes higher than the rate quoted by the appellant, the finding of the learned Single Judge, that the rate quoted by the writ petitioner was lower than that of the ap pellant, cannot, but be termed as erroneous and calls for interference therewith .

33. Let us, now, examine the question as to whether the VAT registration cer tificate, granted under a composition scheme, which the writ petitioner had sub mitted, an appropriate VAT registration certificate as envisaged by the tender n otice. The copy of the VAT registration certificate, annexed to the Writ Petitio n, reveals that the same is a certificate of registration in Form 5 of the Value Added Tax Rules, 2005, and the commodities dealt in has been specified to be ’C ivil Works’ for the purpose of Works Contract. The writ petitioner has also anne xed to the writ petition a copy of the order, dated 5.6.2009, passed by the Supe rintendent of Taxes, Guwahati, whereby the writ petitioner was allowed to pay co mposition amount in respect of the Works Contract. As per Section 20(2) of the A ssam VAT Act, 2003, the Government may, by notification published in the Officia l Gazette and subject to such conditions and restrictions, as may be specified t herein, permit any dealer liable to pay tax on sales effected by way of transfer of property in goods (whether as goods or in some other form) involved in the e xecution of a works contract, to pay, at his option, in lieu of the amount of ta x payable by him under this Act, an amount by way of composition at the rate spe cified in the Notification, but not exceeding five percentum of the total contra ct value of the works contract. Rule 13(13) of the Assam VAT Rules, 2005, provid es that every dealer, who opts for composition scheme under Section 20 of the As sam VAT Act, 2003, or a casual dealer shall apply for registration in Form 4 and shall be granted a Registration Certificate in Form 5 and shall be assigned a G eneral Registration Number, which shall be written in the registration certifica te. Other dealers have to apply for registration in Form 2 and certificate shall be supplied in Form 3.

34. From the certificate of registration annexed to the Writ Petition, it is clear that the same is in respect of the composition scheme and the item/commod ity mentioned therein civil work. The registration has been granted in Form 5, w herein the General Registration number is mentioned. In the present case, the it ems are woolen blankets, which can, by no stretch of imagination, be said to be civil work. Thus, the certificate of registration, which the writ petitioner sub mitted with its tender, was not at all in compliance with the requirements of Cl ause 7(a). What, now, needs to be noted is that Mr. Kataki, learned counsel, has su 35. bmitted that the certificate of registration, which the writ petitioner has subm itted, was in respect of ’works contract’ and the supply of woolen blanket too i s nothing but a ’works contract’ and it was, therefore, not necessary to submit a certificate of registration other than the one, which the writ petitioner had already submitted. The submission, so made on behalf of the writ petitioner-resp ondent No. 1, leaves us with no option but to examine as to what a ’works contra ct’ means.

36. ue Added Tax Act, which reads as under: The term, ’works contract’, is defined in Section 2(57) of the Assam Val (cid:28)Section 2(57) \works contract\ includes any agreement for carrying out for cas h, deferred payment or other payment or other valuable consideration, the buildi ng, construction, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property; (cid:29)

37. From the definition of ’works contract’, as contained in Section 2 (57), it becomes clear that a ’works contract’ means any agreement for carrying out, for cash, deferred payment, or other payment, or other valuable consideration, t he building, construction, fabrication, erection, installation, fitting out, imp rovement, modification, repair or commissioning of any movable or immovable prop erty, etc. Thus, a ’works contract’ is an act, distinct and different from supp ly of woolen blanket. By no rational analysis, supply of woolen blankets can be defined to be, or be treated as, a ’works contract’. The distinction between a ’contract for sale’ and a ’’contract for work’ and labour’ has been succinctly described in Halsbury’s Laws of England, IIIrd Volume, Article 3, Page 6 in the following words:- (cid:28)A contract of sale is a contract whose main object is the transfer of property in, and delivery of the possession of, a chattel as a chattel to the buyer. When the main object of work undertaken by the payee of the price is not transfer of chattel qua chattel, the contract is one for work and labour. The test is wheth er or not the work and labour bestowed, and in anything that can properly become the subject of sale; neither the ownership of the materials, nor the value of t he skill and labour as compared with the value of the materials is conclusive, a lthough such matters may be taken into consideration in determining, in the circ umstances of a particular case, whether the contract is in substance one for wor k and labour or one for sale of the chattel. The primary test is whether the con tract is one whose main object is transfer of property in a chattel as a chattel to the buyer, though some work may be required to be done under the contract as ancillary or incidental to the sale or it is carrying out of work by bestowal o f labour and services and materials are used on execution of such work. (cid:29)

38. Coupled with the above, ’Benjamin on Sale’ (Eighth Edition, Vol.34, page 6), has observed that, where the employer delivers to a workman either all or t he principal materials of a chattel on which the workman agrees to do works, the re is a bailment by the employer, and a ’contract for work’ and labour, or for work, labour and materials (as the case may be) by the workman. Materials added by the workman, on being affixed to or blended with the employers materials, the reupon vests in the employer by accession and not under any contract of sale. Wh ether the workman supplies either or the principal materials, the contract is a ’contract for sale’ of the completed chattel, and any material supplied by the e mployer, when added to the workman’s material, vests in the workman by accession . The fact that the value of the materials, supplied by one of the parties, exce ed the value of the materials supplied by the other, does not conclusively prove that the more valuable are the principal material.

39. From what have been described as the distinction between a ’contract for work’ and a ’contract for sale’ of goods, what becomes clear is that if the in tention is to transfer, for a price, a chattel in which the transferor had no pr evious property, then, the contract is a contract for sale. In a contract for sa le, the main object is the transfer of property and delivery of possession of th e property; whereas the main object in a ’contract for work’ is not the transfe r of the property, but it is one for work and labour.

40. One of the tests to determine whether a contract is a ’contract for work ’ or for sale was formulated by the Supreme Court, in Commissioner of Taxes vs . Purushottam Premji, reported in (1970) 26 STC 38 (SC), and the question, so p osed, was answered as under: (cid:28)The primary difference between a ’contract for work’ or service and a contact for sale of goods is that in the former there is in the person performing work o r rendering service no property in the thing produced as a whole. In the case of a contract for sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery, an d the property therein passes only under the contract relating thereto to the ot her party for price. (cid:29)

41. From the above observations, made in Purushottam Premji (supra), it is c lear that the primary difference between a contract for ’work and service’ and a contract for ’sale of goods’ is that in the case of the contract for ’sale of g oods’, the goods produced, as a whole, has individual existence as the sole prop erty of the party producing it, at some time before delivery of the same, and th e property therein passes only under the contract relating thereto the other par ty for a price; whereas in a ’contract for work’’, the person, performing work o r rendering service, has no property in the goods produced as a whole.

42. From the observations, made above, in Purushottam Premji (supra), it is clear that the primary difference between a ’contract for work and service’ and a ’contract for sale of goods’ is that in the case of the former, the goods prod uced, as a whole, has individual existence as the sole property of the party pro ducing it, at some time before delivery of the same, and the property therein pa sses only under the contract relating thereto the other party for a price; where as in a ’contract for work’, the person, performing work or rendering service, h as no property in the goods produced as a whole.

43. We may, at this stage, refer to the case of State of A.P. Vs. Kone Eleva tors (India) Ltd, reported in (2005) 3 SCC 389, wherein the distinction between a ’contract for sale’ and a ’contract for work’ has been succinctly described. S peaking for the Court, S.H. Kapadia, J., (as his Lordship, then, was) drawing th e distinction between the two, observed and held as under: (cid:28)5. It can be treated as well settled that there is no standard formula by which one can distinguish a (cid:28)contract for sale (cid:29) from a (cid:28)works contract (cid:29). The question is largely one of fact depending upon the terms of the contract including the n ature of the obligations to be discharged thereunder and the surrounding circums tances. If the intention is to transfer for a price a chattel in which the trans feree had no previous property, then the contract is a contract for sale. Ultima tely, the true effect of an accretion made pursuant to a contract has to be judg ed not by artificial rules but from the intention of the parties to the contract . In a (cid:28)contract of sale (cid:29), the main object is the transfer of property and deliv ery of possession of the property, whereas the main object in a (cid:28)contract for wo rk (cid:29) is not the transfer of the property but it is one for work and labour. Anoth er test often to be applied is: when and how the property of the dealer in such a transaction passes to the customer: is it by transfer at the time of delivery of the finished article as a chattel or by accession during the procession of wo rk on fusion to the movable property of the customer? If it is the former, it is a (cid:28)sale (cid:29); if it is the latter, it is a (cid:28)works contract (cid:29). Therefore, in judging whether the contract is for a (cid:28)sale (cid:29) or for (cid:28)work and labour (cid:29), the essence of th e contract or the reality of the transaction as a whole has to be taken into con sideration. The predominant object of the contract, the circumstances of the cas e and the custom of the trade provide a guide in deciding whether transaction is a (cid:28)sale (cid:29) or a (cid:28)works contract (cid:29). Essentially, the question is of interpretation of the (cid:28)contract (cid:29). It is settled law that the substance and not the form of the contract is material in determining the nature of transaction. No definite rule can be formulated to determine the question as to whether a particular given con tract is a contract for sale of goods or is a works contract. Ultimately, the te rms of a given contract would be determinative of the nature of the transaction, whether it is a (cid:28)sale (cid:29) or a (cid:28)works contract (cid:29). Therefore, this question has to b e ascertained on facts of each case, on proper construction of terms and conditi ons of the contract between the parties. (cid:29) From the above observations, made in Kone Elevators (India) Ltd. (supra) 44. , what clearly surfaces is that the question as to whether a contract is a ’cont ract for sale’ or a ’contract for work’, depend upon the nature of obligations to be discharged under the contract and the surrounding circumstances. If the in tention is to transfer for a price a chattel in which the transferee had no prev ious property, then, the contract is a ’contract for sale’. Thus, the main objec t, in a ’contract for sale’ is the transfer of property and delivery of possessi on of the property, whereas the main object in a ’contract for work’ is not the transfer of the property, but it is one for work and labour. The test, which is often applied, is when and how the property of the dealer in such a transaction passes to the customer is it by transfer at the time of delivery of the finished article as a chattel or by accession during the procession of work on fusion to the movable property of the customer? If it is the former, it is a ’sale’, if i t is the latter, it is a works contract. In judging, therefore, whether the cont ract is for a sale or for ’work and labour’, the essence of the contract or the reality of the transaction, as a whole, has to be taken into consideration. The predominant object of the contract, the circumstances of the case and the custom of the trade provide a guide in deciding whether transaction is a ’sale’ or a ’ works contract’.

45. In the light of the law as discussed above, when the present contract is carefully analysed, it becomes clear that the intention of the tenderer is to t ransfer for a price the chattel (blanket, in the present case, to the State resp ondents), wherein the State respondents had no previous property. In such circum stances, the supply of woolen blankets, covered by the tender notice, is nothing , but a ’contract for sale’. Hence, the contention of Mr. Kataki that the contra ct for supply of woolen blankets is a ’works contract’ is, in the facts and atte nding circumstances of the present case, wholly untenable and is, therefore, rej ected. In the case at hand, considering the fact that the tender notice specifi 46. cally provided for submission of VAT registration certificate, the same must be treated to be with regard to the item sought to be purchased. The object of aski ng for the certificate of registration is that the tenderer must be a registered dealer so that the tax, which will become due to the State for the supply of th e items, pursuant to the tender notice, is duly paid and this object cannot be, obviously, achieved by submission of a certificate of registration in respect of Civil Works and, that too, under a composition scheme. We have, therefore, no h esitation in holding that the writ petitioner-respondent No.1 herein had not ful filled the condition of submission of VAT registration certificate as was requir ed to be done under the tender notice and, hence, the writ petitioner’s tender w as not a valid tender. We may, now, examine Mr. Kataki’s contention that the tender of the appe 47. llant was not a valid tender inasmuch as the appellant had deposited the earnest money in respect of only one category of woolen blanket costing Rs. 271/-, wher eas the contract for supply was awarded for woolen blanket costing Rs. 235 only. It needs to be noted, in this regard, that Clause 6 of the tender notice states that the intending tenderer shall deposit earnest money @ 2% of the estimated v alue of the articles tendered for. In the present case, the quantity of woolen b lankets to be supplied was fixed and the appellant had offered three different q ualities of woolen blankets priced differently. The appellant, however, deposite d the earnest money taking into consideration the price of woolen blanket, whic h Rs. 271/-. However, the State respondents/authorities concerned accepted the a ppellant’s offer to supply woolen blanket @ Rs. 235/- per blanket. The earnest money, required to be deposited for the supply of blanket @ Rs. 235/-, per blank et, was much less than the earnest money, which the appellant had already deposi ted. It also needs to be noted that the appellant submitted only one tender and the appellant, therefore, was not required to deposit earnest money for differe nt types of woolen blankets, which the appellant had offered, when it was clear (and it is not in dispute) that only one type of woolen blanket would be accepte d and ordered for. Situated thus, we find no force in the submission of Mr. Kata ki that the appellant had not fulfilled the conditions of the NIT in respect of deposit of earnest money.

48. Because of what have been discussed and pointed out above, we are clearl y of the view that the petitioner-respondent No. 1 had not fulfilled the essenti al conditions of the tender notice, the writ petitioner’s tender was not a valid tender and was rightly rejected by the State respondents/authorities concerned. Extended logically, it would mean, and we hold, that the learned Single Judge erred in law in treating the writ petitioner’s tender as a valid tender and also in treating the writ petitioner as a tenderer, who had quoted, for supply of bl anket, a rate lower than that of the appellant. The writ petition was, thus, in correctly and wrongly allowed.

49. In the result and for the reasons discussed above, this appeal succeeds. The judgment and order, under appeal, shall accordingly stand set aside and th e writ petition shall stand dismissed. This appeal stands disposed of in terms of the above observations and di

50. rections. 51. No order as to costs. Rk-dutt 210211 JUDGE JUDGE