Supreme Court Restores Quarry Award, Holds Bidder Complied With ITR and GST Conditions

A bench of Justices Bela M. Trivedi and Prasanna B. Varale heard appeals challenging the Orissa High Court's May 18, 2023 order that quashed the award of the Karangadihi quarry lease and directed a fresh tender. The appeals arose from rival contentions over compliance with tender conditions — chiefly the requirement of the "income tax return of previous financial year" and a "no GST dues" certificate — following a long‑term lease auction conducted by the Tahasildar, Banspal.

The Court allowed the appeals, set aside the High Court order and held that the Tahasildar and Sub‑Collector had acted within their discretion in declaring M/s Sri Venkateswara Constructions the successful bidder. The Court found that the bidder had submitted the latest available income‑tax return in the circumstances and had produced a GST "no dues" communication from the jurisdictional officer, while the rival bidder had relied on a self‑downloaded GST portal printout that could not satisfy the tender condition. The Court emphasised administrative finality and the public revenue interest in accepting the higher bid. The Court, in its reasoning, observed: “On the contrary, the respondent no.4 himself failed to comply this condition and instead of placing before the authority any certificate issued by the GST officer the respondent no.4 only placed on record a screenshot of his GST portal reflecting his GST dues. Such a screenshot could not have been accepted as compliance of condition of auction notice. Therefore, the respondent no.4 had complied with only one condition and failed to comply the other pre‑requisite in the form of GST certificate. Thus, considering the material placed on record, we are of the clear opinion, that the submissions made on behalf of respondent no.4 is not sustainable for the simple reason that the Tahasildar was satisfied on the aspect that the petitioner had complied with both the conditions and there was no need for the him to further wait for some approval and delay the process.”

Background: The dispute arose from an auction notice dated July 18, 2022 issued by the Tahasildar, Banspal, for a five‑year lease of the Karangadihi stone quarry. The notice required bidders to submit, inter alia, (i) the income‑tax return of the previous financial year showing annual income not less than the royalty and offered additional charge for the annual minimum guaranteed quantity or an 18‑month bank guarantee, and (ii) a certificate/letter from the GST jurisdictional officer that no GST dues were pending. Five bids were received and opened on August 5, 2022. On scrutiny the Tahasildar declared M/s Sri Venkateswara Constructions the successful bidder (having quoted the highest additional charge) after recording satisfaction with the documents produced; the rival bidder (respondent no.4) had submitted only a downloaded GST portal printout.

Respondent no.4 challenged the selection before the Sub‑Collector and then before the Orissa High Court. The Sub‑Collector dismissed the appeal; the High Court allowed the writ, quashed the Tahasildar’s and Sub‑Collector’s orders and directed a fresh tender, holding that the tendering authority had proceeded without obtaining necessary departmental confirmations and that the bidder had not produced the ITR for FY 2021‑22. The High Court characterised the process as "arbitrary, unreasonable and contrary to the provisions of law."

Before the Supreme Court, the successful bidder relied on the Income‑Tax Act provisions (including Section 44AB) and on the Income Tax Department notification extending due dates for certain tax‑audit filers, contending that the 2020‑21 return was the latest available and was properly relied upon; it also relied on a formal communication from the GST jurisdictional officer that, at the relevant time, no dues stood against it. The State respondents supported the Tahasildar’s contemporaneous verification and the view that the tender conditions fulfilled their object of "ascertain[ing] and assess[ing] the financial capacity and capability of the bidder." The rival bidder argued non‑compliance and mala fides. The Court concluded that the tendering authority's satisfaction was reasonable, that the rival bidder’s GST portal screenshot did not meet the prescribed condition, and that acceptance of the higher compliant bid served the public exchequer.

Result: Appeals allowed; the High Court order dated May 18, 2023 was quashed and set aside. No interim directions were continued.

Case Details: Case No.: 2025 INSC 580 Case Title: M/S Sri Venkateswara Constructions v. State of Odisha & Ors. Appearances: For the Petitioner(s): [Advocates not indicated in the judgment text] For the Respondent(s): [Advocates not indicated in the judgment text]