AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (11) TMI 405
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.... Employment and Conditions of Service) Act, 1996 (for short "the BOCW Act"); The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Central Rules, 1998, (for short the "1998 Central Rules"); The Building and Other Construction Workers Welfare Cess Act, 1996 (for short "the Cess Act") and The Building and Other Construction Workers Welfare Cess Rules, 1998 (for short "the Cess Rules") are constitutionally valid and within the competence of the Parliament as the levy under the impugned enactments is a "fee", referable to Entry 97 of List-I of the Seventh Schedule of the Constitution of India. 2. Since all the appeals involve a common pure question of law, these are being disposed of by this common judgment. For deciding the subject issue before us viz. constitutional validity of the Cess Act, even a reference to the factual aspects is unnecessary, except to note that the appellant in these appeals is a contractor, engaged in building and other construction works in the National Capital Territory of Delhi. 3. However, before addressing the contentions advanced on behalf of the parties, it will be useful to survey the relevant provi....
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....emsp;     ...            ... (e) "building worker" means a person who is employed to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, in connection with any building or other construction work but does not include any such person- (i) who is employed mainly in a managerial or administrative capacity; or (ii) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature; (f) ...           ...            ... (g) "contractor" means a person who undertakes to produce a given result for any establishment, other than a mere supply of goods or article....
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....ntribution due to any financial hardship, the Board can waive the payment of such contribution for a period not exceeding three months at a time. Chapter V of the BOCW Act sets out the constitution and functions of the Building and Other Construction Workers' Welfare Boards. Section 24 sets out the provision for the constitution of the Welfare Fund and its application. Part III of Chapter VI of the BOCW Act contains provisions concerning the safety, health and welfare of the construction workers generally and with reference to specific kinds of activities. It is thus, clear from the scheme of the BOCW Act that its sole aim is the welfare of building and construction workers, directly relatable to their constitutionally recognised right to live with basic human dignity, enshrined in Article 21 of the Constitution of India. It envisages a network of authorities at the Central and State levels to ensure that the benefit of the legislation is made available to every building and construction worker, by constituting Welfare Boards and clothing them with sufficient powers to ensure enforcement of the primary purpose of the BOCW Act. 6. The means of generating revenues for making....
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....ority is required, as may be prescribed. (3) The proceeds of the Cess collected under Sub-section (2) shall be paid by the local authority or the State Government collecting the Cess to the Board after deducting the cost of collection of such Cess not exceeding one per cent of the amount collected. (4) Notwithstanding anything contained in Sub-section (1) or Sub-section (2), the Cess leviable under this Act including payment of such Cess in advance may, subject to final assessment to be made, be collected at a uniform rate or rates as may be prescribed on the basis of the quantum of the building or other construction work involved." Section 4 of the Cess Act requires "every employer" to file a return in the manner prescribed. Section 5 spells out the process for the assessment of the Cess payable, while, Section 8 provides for interest payable in the event of a delayed payment of Cess. Section 9 stipulates penalty for non-payment of the Cess within the specified time. There is an internal mechanism of appeal under Section 11 for an employer who is aggrieved by the assessment order made under Section 5. In exercise of the power conferred under Section 14 of the Cess Ac....
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....W Act notified the Delhi Building and Other Construction Workers (RE&CS), Rules, 2002 (for short "the Delhi Rules") vide Notification No. DLC/CLA/BCW/01/19 dated 10th January, 2002. Accordingly, Government of NCT of Delhi constituted the Delhi Building and Other Construction Workers Welfare Board vide Notification No. DLC/CLA/BCW/02/596, dated 2nd September, 2002. Thus, the Cess Act and the Cess Rules are operative in the whole of NCT of Delhi w.e.f. January, 2002. 10. As noted above, the principal ground for challenge to the validity of the Cess Act is the lack of legislative competence of the Parliament. Mr. Uday Joshi, learned counsel appearing on behalf of the appellant, strenuously urged that the impost levied by the Cess Act is a compulsory and involuntary exaction, made for a public purpose without reference to any special benefit for the payer of the Cess. It was argued that there exists no co-relationship between the payee of the Cess and the services rendered and therefore, the levy is in effect a tax. It was submitted that the maintenance of a separate corpus, i.e.. Building and Other Construction Workers Welfare Fund, which also vests in the State, is a cloak to c....
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....e arising for consideration is whether the cess levied under the scheme of the impugned Cess Act is a 'fee' or a 'tax'. Before embarking on an evaluation based on the said submissions, it would be apposite to briefly examine the concept of 'tax' and 'fee'. 15. The question whether a particular statutory impost is a 'tax' or 'fee' has arisen as a challenge in several cases before this Court, which in turn necessitated the demarcation between the concepts of 'Cess', 'tax' and 'fee'. The characteristics of a fee, as distinct from tax, were explained as early as in The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt - AIR 1954 SC 282 (generally referred to as the 'Shirur Mutt's Case'). The ratio of this decision has been consistently followed as a locus classicus in subsequent decisions dealing with the concept of 'fee' and 'tax'. The Constitution Bench of this Court in Hingir Rampur Coal Co. Ltd. v. State of Orissa - 1961 (2) SCR 537 was faced with the challenge to the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952, levying Cess on the petitioner's colliery. The Bench explained different featur....
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....tions may arise. In such a case it is necessary to enquire, what, is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy." (Emphasis supplied by us) 16. On the basis of the above considerations, this Court in the aforementioned case, examined the scheme of the Act impugned in that case in depth and opined that the primary and the principal object of the Act was to develop the mineral areas in the State and to assist in providing more efficient and extended exploitation of its mineral wealth. The Cess levied did not become a part of the consolidated fund and was not subject to an appropriation in that behalf. It went into a special fund earmarked for carrying out the purpose of the Act and thus, its existence established a correlation between the Cess and the purpose for which it was levied, satisfying the element of quid pro quo in the scheme. These features of the Act impressed upon the levy the character of a 'fee' as distinct from a 'tax'. 17. Re....
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....merged in the public revenues for the benefit of the general public and as such the nexus between the Cess and the purpose for which it is levied gets established, satisfying the element of quid pro quo in the scheme. With these features of the Cess Act in view, the subject levy has to be construed as 'fee' and not a 'tax'. Thus, we uphold and affirm the finding of the High Court on the issue. 20. At this juncture, we may also deal with the argument of learned counsel appearing for the appellant that, since there exists no 'quid pro quo' between the payer (contractors) of the fee and the ultimate beneficiary (workers) of the services rendered, the said levy is in fact a tax. While it is true that 'quid pro quo' is one of the determining factors that sets apart a 'tax' from a 'fee' but the concept of quid pro quo requires to be understood in its proper perspective. 21. A Constitution Bench of this Court in Kewal Krishan Puri and Anr. v. State of Punjab and Anr. - 1980 (1) SCC 416, while dealing with provisions of the Punjab Agricultural Produce Markets Act, 1961, held that the element of quid pro quo must exist between the payer of the Fee and the special services render....