Contractual agreements dictate that indirect taxes like GST, not included in the bid price, are the employer's responsibility; contractors are entitled to reimbursement.

JUDGMENT :

P.M. Manoj, J.

This writ petition is preferred by the Contractor who was awarded the tender for the construction of a hospital block (consisting of a Ward, OT, and OPD) at the Institute of Integrated Medical Sciences, Palakkad Medical College. The bid was accepted at 4% below the estimated rate, and the formal tender agreement was executed between the petitioner and the 2^nd and 4^th respondents on 30.01.2017.

2. The grievance voiced in this petition pertains to the non-payment of the full contractual amount due to the petitioner, including applicable VAT and GST. Furthermore, the petitioner seeks the reimbursement of the VAT and GST amounts already remitted by them to the authorities.

3. The petitioner contends that, pursuant to Clause 3.10.3 of the tripartite agreement, all duties, taxes, transportation, loading, unloading, and octroi payable by the contractor under the contract or any other cause were to be included in the rates, prices, and the total bid price submitted. Furthermore, all incidentals, overheads, leads, lifts, and carriages required for the execution and completion of the works were also to be incorporated into the bid price. It is pertinent to note that the contract was awarded on 01.10.2016, and the formal agreement was executed on 30.01.2017. At the time of these transactions, the VAT Act was in force. The implementation of the GST regime only occurred subsequently, effective from 01.07.2017.

4. Pursuant to Clause 4(4)(1) of the Ext.P2 tripartite agreement, the contract is defined as an item rate contract, where the rates provided are for the finished work as specified in the contract documents. The contract prices are tentative, based on estimated quantities, and are subject to adjustment based on the actual quantities executed and approved by the Engineer-in-Charge. The contractor acknowledges and agrees that the amount payable is to be assessed on a re-measurable basis in accordance with the tender rates. The contractual price shall encompass payment for the supply of all labour (including payments to subcontractors), equipment, materials, plant and machinery, tools, and transportation. It also includes costs for framework, scaffolding, and all works under this contract, as well as applicable taxes—specifically Works Contract Tax (WCT), Value Added Tax (VAT), duties, octroi, levies, royalties, fees, and insurance premiums.

5. The price further includes contributions towards employee benefits (such as ESI and PF), the arrangement of power and water, and all services constituting the scope of work defined under the General Conditions of Contract. Finally, the contract price covers the contractor's establishment costs, infrastructure, overheads, and profits, and includes all costs and expenses necessary for the proper execution and completion of the work in conformity with the contract documents and best engineering practices, and to the satisfaction of the employer.

6. Clause 4.34.1 of the Ext.P2 agreement further stipulates that the contractor shall be liable for, and must pay, all taxes, duties, and levies lawfully assessed against either the owner or the contractor in pursuance of the contract. Additionally, the contractor is responsible for all Indian duties, levies, and taxes assessed against them personally regarding income and property. This clause must be read in conjunction with Clause 3.10.3 of the "Instructions to Bidders."

7. As part of the tender process, as per the instructions of the 4^th respondent, the petitioner submitted Bill of Quantities (BOQ) rates exclusive of taxes. As shown in Ext.P3, the petitioner submitt