Supreme Court Settles ‘Previous Financial Year’ Dispute in Tender Law: ITR Filing Window Matters

The dispute arose from a sand quarry tender floated by the Tehsildar, Tangi Chowdwar, Cuttack, in July 2022 for extraction rights over the Mahanadi Sand Quarry under the Odisha Minor Mineral Concession Rules, 2016. Twenty bidders participated, with M/s Shanti Construction Pvt. Ltd. offering the highest rate of ₹2,127.27 per cubic meter. However, the Tender Committee disqualified its bid for not furnishing an Income Tax Return (ITR) for the financial year 2021-2022, holding it non-compliant with Rule 27(4)(iv) of the Rules, and awarded the contract to another bidder who quoted ₹1,250 per cubic meter.

The High Court upheld this disqualification but directed that the successful bidder must match the higher bid to prevent loss to the State exchequer. Both bidders appealed to the Supreme Court — the disqualified bidder challenging its rejection and the successful bidder contesting the direction to increase its rate.

Main Issue: Whether “previous financial year” in Rule 27(4)(iv) of the Odisha Minor Mineral Concession Rules, 2016, should refer to the year immediately preceding the tender year, or the year for which the ITR filing period had not yet expired.

SC Held: The term “previous financial year” in Rule 27(4)(iv) must be interpreted harmoniously with the Income Tax Act, 1961. Since the tender was issued on 11 July 2022, when the filing deadline for FY 2021–2022 was still open (until 31 October 2022), bidders could not be expected to furnish the return for that year. The Court ruled that the correct interpretation of “previous financial year” was 2020–2021 — the most recently completed financial year with an available ITR. The Tender Committee’s rejection of the highest bid was, therefore, arbitrary and contrary to public interest.

Setting aside the High Court’s judgment, the Supreme Court directed the Tehsildar to issue a fresh auction notice under the Rules and allow all interested bidders, including the previous ones, to participate. The State was ordered to refund the successful bidder’s deposited amount with 6% interest, emphasizing that public auctions involving natural resources must maximize public value through fairness and transparency.

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