Allowed

M/S Ram Khiladi Gurjar v. Rajasthan State Cooperative Marketing Federation Ltd. (Rajfed)

Rajasthan HC27 Nov 2018CW/25605/2018

Case brief

AI extract

What is this about?

This court allowed a writ petition challenging the rejection of a firm's bid for empanelment as a transporter. The rejection was based on a tender condition requiring audited balance sheets. The court held that since the firm's turnover did not exceed one crore, statutory audit was not mandatory under Section 44AB of the Income Tax Act, and the tender condition was illegal and arbitrary.

What did the court decide?

The writ petition was allowed; respondents directed to consider the petitioner's bid for empanelment and not reject it on grounds of non-audited balance sheets.

M/S Ram Khiladi Gurjar Vs Rajasthan State… — Company and Corporate | Rajasthan HC (2018)

¶1

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

¶2

S.B. Civil Writs No. 25605/2018

¶3

M/s Ram Khiladi Gurjar, The Proprietor Firm Through Its Sole Proprietor Ram Khiladi Gurjar S/o Sugan Singh Gurjar, Aged About 53 Years, Resident Of Village Bajoli, Post Bichhpuri Gujran, Tehsil Khandar, District Sawai Madhopur (Raj.)

¶4

----Petitioner

¶5

Versus

¶6

Rajasthan State Cooperative Marketing Federation Ltd. (Rajfed), Bhawani Singh Marg, Jaipur Through Its Managing Director.

¶7

Registrar Cooperative Societies, Cooperative Department, Sahkar Bhawan, Jaipur.

¶8

----Respondents

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For Petitioner(s) : Mr. Manoj Kumar Bhardwaj Adv. For Respondent(s) : Mr. Bhuvnesh Sharma Adv.

¶10

HON'BLE MR. JUSTICE ASHOK KUMAR GAUR

¶11

Order

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27/11/2018

¶13

The instant writ petition has been filed by the petitionerProprietor firm challenging the order dt. 14^th November, 2018, declining to register the petitioner firm as transporter and handler of the agricultural produce as per the terms of the advertisement dt. 6^th October, 2018, published in the newspaper.

¶14

The petitioner has further challenged the action of the respondents to be illegal while denying the registration of the firm on account of not getting the balance-sheets audited by Income Tax Department for last three years. The petitioner in alternative has prayed that condition No. 5 of the advertisement may be declared arbitrary and may be quashed.

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(2 of 8)

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[CW-25605/2018]

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This Court had issued notices to the respondents on 20^th November, 2018 and further asked counsel for the petitioner to serve copy to the panel lawyer-Mr. Bhuvnesh Sharma. Mr. Bhuvnesh Sharma learned counsel for the respondents has appeared and submitted that reply of the writ petition has been filed today in the Registry.

¶18

Learned counsel for the parties submitted that the present writ petition may itself be decided at this stage and accordingly, the present writ petition is decided by this order.

¶19

Brief facts of the case are that the Rajasthan State Cooperative Marketing Federation Ltd. (RAJFED) had issued an advertisement for handling the transportation of the agriculture produce for keeping the agriculture produce in ware houses and it was provided in the advertisement that the fees will be given to the persons @ Rs. 20/- per quintal for the purpose of handling and transportation of goods and accordingly the panel of firm/transporter/contractor was to be prepared.

¶20

The detailed conditions of tender notice was available on official website of Government Portal and also official website of Rajasthan State Cooperative Marketing Federation Ltd. (RAJFED). Petitioner has pleaded that respondents issued another advertisement amending the earlier advertisement and the last date of submission of the form was extended up to 31^st October, 2018.

¶21

The relevant clause for the purpose of deciding the present writ petition is Clause 5 in the amended advertisement and the same is reproduced hereunder:-

¶22

(3 of 8)

¶23

[CW-25605/2018]

¶24

“5. rhu o"kksZ dh vkWfMV csysUl&’khV ¼ftlesa ifjogu o gS.Mfyax dk;Z dk VuZvkWoj i`Fkd ls vafdr gks½ esa bu dk;kZsa dk rhu o"kksZ dk dqy VuZvkWoj de ls de 1- 50 djksM+ :- gksA“.

¶25

Petitioner has pleaded that after finding the firm to be fully eligible to be registered, the petitioner-firm filled in the application and submitted the same to the respondents along with security deposit of Rs. 1,00,000/- and Rs. 6,000/- as fees through Demand Drafts. The petitioner-firm also annexed the balance-sheets of three preceding years. The balance-sheets filed by the petitioner revealed turnover for Financial Year 2015-16 of Rs. 51,22,100/for Financial Year 2016-17 of Rs. 53,19,950/- and turnover for the Financial Year 2017-18 of Rs. 54,35,320/- and the total turnover of the petitioner-firm came to more than Rs. 1.5 Crores for last three years.

¶26

Petitioner has pleaded that the respondents published an order dt. 14^th November, 2018 (Annex.7) whereby they prepared a panel of 7 persons/firms and as such the bid submitted by the petitioner-firm was rejected as the petitioner-firm did not find its name in the list of eligible persons.

¶27

Petitioner has pleaded that petitioner-firm made enquiries from the respondents to find out the reason of rejection and it was verbally informed to them that petitioner-firm was not found eligible and the petitioner-firm has submitted unaudited balancesheets for the last three preceding years.

¶28

The petitioner has pleaded in the writ petition that he had explained to the respondents that there was no requirement of audit of his firm as the balance-sheets for last three preceding years were certified by the Charted Accountant and as per the legal provision, the audit of the firm was not compulsory, as audit of the firms having turnover of more than Rs. 1 Crore in a

¶29

(4 of 8)

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[CW-25605/2018]

¶31

financial year, is required and the firms which have less turnover than the Income Tax audit is not required.

¶32

The petitioner has pleaded that the relation between the condition imposed and the object sought to be achieved is only with respect to transportation and handling of agriculture produce which never requires imposition of the financial implication and as such the said condition is challenged by the petitioner-firm as an alternative prayer.

¶33

Learned counsel for the petitioner-Mr. Manoj Kumar Bhardwaj has drawn the attention of this Court towards Section 44AB of the Income Tax Act, 1961, where audit of the accounts of certain persons carrying on business or profession is required before the specified date and such report of audit in the prescribe form is duly signed and verified by such accountant and is required to be given.

¶34

Counsel submitted that Section 44AB provides that every person carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceeds one crore rupees in any previous year is required to get his accounts of such previous years audited. The relevant clause of Section 44AB is reproduced hereunder:-

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“ 44AB:- Every person,—

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(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; or

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(b) carrying on profession shall, if his gross receipts in profession exceed [fifty] lakh rupees in any previous year; or

¶38

(c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section

¶39

(5 of 8)

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[CW-25605/2018]

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44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or

¶42

(d) carrying on the [profession] shall, if the profits and gains from the [profession] are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or

¶43

(e) carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,

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get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed :

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[ Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year:]

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Provided [ further ] that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BBA, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later:

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Provided [ also ] that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section.

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Explanation.—For the purposes of this section, —

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(6 of 8)

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[CW-25605/2018]

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(i) “accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288;

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(ii) “specified date”, in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139”

¶53

Counsel submitted that rejection of the empanelment of the petitioner-firm is contrary to the legal provision of getting the accounts audited and the requirement of Section 44AB does not apply to the petitioner-firm as admittedly the turnover of the petitioner-firm was less than one crore in any of the last three financial years.

¶54

Counsel submitted that the requirement of having the turnover of 1.5 Crore in last 3 financial years is fulfilled by the petitioner-firm and only on account of audit not being carried out, the respondents have acted arbitrarily in rejecting the empanelment of the petitioner-firm.

¶55

Counsel for the respondent-Mr. Bhuvnesh Sharma has submitted that respondents have not committed any illegality by rejecting the empanelment of the petitioner-firm as the total turnover of the petitioner was Rs. 1.58 Crore but such accounts of the petitioner-firm was not audited and as such the respondents were justified in insisting for compliance of the tender conditions.

¶56

Counsel has further drawn the attention of this Court towards para 11 of the reply wherein it has been asserted that petitioner failed to produce the audited balance-sheets and therefore his application could not be processed.

¶57

Counsel further submitted that once condition of the audited balance-sheets for last three preceding years was prescribed,

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(7 of 8)

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[CW-25605/2018]

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every applicant or the bidder was to specify the said condition and the condition cannot be termed as arbitrary.

¶61

I have heard the submissions made by learned counsel for the parties and perused the material available on record.

¶62

This Court finds that the requirement of audit of accounts is to be governed by the provisions contained in Section 44AB of the Income Tax Act, 1961 and if the turnover/sale/gross receipts in business does not exceed one crore rupees in any previous year, there is no requirement of getting the accounts audited.

¶63

This Court further finds that the requirement as per Condition No. 5 was to consider the turnover for last three years of Rs. 1.50 Crore and if the petitioner-firm had the turnover in last three years of 1.50 Crore, the same could not be related to the condition of audited balance-sheets.

¶64

The plea of the respondents that even if the turnover is less than One Crore but it exceeds to 1.50 Crore in the last three years, the same is required to be audited, this Court finds no substance in the arguments raised by counsel for the respondents, as it runs contrary to the requirement of Section 44 (A)(B) of the Income Tax Act, 1961.

¶65

This Court finds that if the procuring entity prescribes a condition to be fulfilled by the bidder, such condition had to be in consonance with the requirement of law. The Income Tax Act, 1961 has prescribed the minimum turnover for getting the accounts audited, the procuring authority cannot interprete and put such a condition to insist upon getting the accounts audited even if some assessee/businessmen who has a turnover of less than one crore in a particular year.

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(8 of 8)

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[CW-25605/2018]

¶68

This Court finds little substance in the submission of the learned counsel for the respondents that the action taken by the respondents is perfectly legal and justified. The respondents while considering the bid submitted by different eligible bidders was required to consider the condition which was prescribed in the tender and also to fulfill the requirement of compliance of relevant law as well.

¶69

This Court finds that non inclusion of name of the petitionerfirm on account of not having the audited balance-sheets is not justified and respondents have committed illegality in rejecting the bid of the petitioner-firm.

¶70

Accordingly, the present writ petition succeeds and is hereby allowed. The respondents are directed to consider the bid of the petitioner for the purpose of empanelment and it should not be rejected on the ground of not having audited balance-sheets of last three years. The compliance of the order may be made within a period of fifteen days from the date of receipt of certified copy of this order.

¶71

Accordingly, the present writ petition stands allowed.

¶72

(ASHOK KUMAR GAUR),J

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Monika/38

M/S Ram Khiladi Gurjar v. Rajasthan State Cooperative Marketing Federation Ltd. (Rajfed)

Case brief

What is this about?

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M/S Ram Khiladi Gurjar v. Rajasthan State Cooperative Marketing Federation Ltd. (Rajfed)

Case brief

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