A global tender was floated by Diesel Locomotive Works, Varanasi, for procurement of turbo wheel impeller assemblies. Bharat Forge Ltd., one of the bidders, filed a writ petition before the Allahabad High Court alleging that competing bidders had quoted a lower GST rate (5%) instead of the correct rate (18%) applicable to the product under HSN Code 84148030. This resulted in significant variation in total bid prices, affecting fair competition. The High Court directed the tendering authority to clarify the applicable HSN Code and GST rate in tender documents to ensure uniform bidding and a level playing field.

The Union of India challenged this direction, contending that determining the applicable GST rate and classification under HSN Code is the statutory responsibility of tax authorities and suppliers, not the purchaser. It was argued that the tender terms already required bidders to indicate applicable taxes and bear responsibility for misclassification.

The Supreme Court allowed the appeal and set aside the High Court’s directions. The Court held that no statutory or public duty was cast on the tendering authority to specify the HSN Code or GST rate in tender documents. The liability to determine and pay the correct GST rested solely with the supplier under the Central Goods and Services Tax Act, 2017 and corresponding State laws. The Court found that the tender clauses clearly placed responsibility on bidders to be GST-compliant, indicate applicable tax rates, and bear the consequences of misclassification. The High Court’s direction compelling authorities to seek clarification from GST officers and mention HSN Codes in tender documents was found to be beyond jurisdiction and impractical.

Accordingly, the Supreme Court held that the tender conditions were valid and that the High Court had erred in judicially intervening in contractual matters where no arbitrariness or mala fides were shown.