AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (5) TMI 1076
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....and (2) of the Building and Other Construction Workers' Welfare Cess Act, 1996, hereinafter referred to as the "Cess Act", read with Rules 3 and Rule 4 (1), (2) (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998, hereinafter referred to as the "Cess Rules" and also Section 2 (1)(d), (g) and (i) of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996, hereinafter referred to as the "BOCW Act". 2. The BOCW Act has been enacted to regulate the employment and conditions of service of building and other construction workers and to provide for their safety, health and welfare measures and for other matters connected therewith or incidental thereto. As per the Statement of Objects and Reasons for the BOCW Act, "it is estimated that about 8.5 million workers in the country are engaged in building and other construction works. Building and other construction workers are one of the most numerous and vulnerable segments of the unorganised labour in India. The building and other construction works are characterised by their inherent risk to the life and limb of the workers. The work is also characterised by ....
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....sity to enact BOCW Act arose from the necessity to levy cess on the cost of construction incurred by the employers on a building and on other construction works, in order to generate funds for the Welfare Boards to enable such Welfare Boards to undertake social security schemes and welfare measures for building and construction workers. 6. Section 2(1)(d) of the BOCW Act defines "building or other construction work" to mean the construction, alteration, repairs, maintenance or demolition of or, in relation to, buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission and distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio; television, telephone, telegraph and overseas communication dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aquaducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the appropriate Government, by notification, but does not include any building or othe....
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.... or who employs building workers in any building or other construction work; and includes an establishment belonging to a contractor, but does not include an individual who employs such workers in any building or construction work in relation to his own residence the total cost of such construction not being more than rupees ten lakhs" 9. Some of the relevant provisions of the BOCW Act are set out hereunder:- "7. Registration of establishments.- (1) Every employer shall,- (a) in relation to an establishment to which this Act applies on its commencement, within a period of sixty days from such commencement; and (b) in relation to any other establishment to which this Act may be applicable at any time after such commencement, within a period of sixty days from the date on which this Act becomes applicable to such establishment, make an application to the registering officer for the registration of such establishment: Provided that the registering officer may entertain any such application after the expiry of the periods aforesaid, if he is satisfied that the applicant was prevented by sufficient cause from making the application within such period. 8. Revocation of re....
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....tion from his monthly wages and to remit the same, within fifteen days front such deduction, to the Board. 17. Effect of non-payment of contribution.- When a beneficiary has not paid his contribution under sub-section (1) of section 16 for a continuous period of not less than one year, he shall cease to be a beneficiary: Provided that if the Secretary of the Board is satisfied that the non-payment of contribution was for a reasonable ground and that the building worker is willing to deposit the arrears, he may allow the building worker to deposit the contribution in arrears and on such deposit being made, the registration of building worker shall stand restored. xxx xxx xxx 22. Functions of the Boards.-(1) The Board may- (a) provide immediate assistance to a beneficiary in case of accident; (b) make payment of pension to the beneficiaries who have completed the age of sixty years; (c) sanction loans and advances to a beneficiary for construction of a house not exceeding such amount and on such terms and conditions as may be prescribed; (d) pay such amount in connection with premia for Group Insurance Scheme of the beneficiaries as it may deem fit; (e) give....
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....d that it shall not be necessary to provide separate urinals in my place where less than fifty persons are employed or where the latrines are connected to a water-borne sewage system. 34. Accommodation.- (1) The employer shall provide, free of charges and within the work site or as near to it as may be possible temporary living accommodation to all building workers employed by him for such period as the building or other construction work is in progress. (2) The temporary accommodation provided under sub-section (1) shall have separate cooking place bathing, washing and lavatory facilities 35. Creches.- (1) In every place where in more them fifty female building workers are ordinarily employed, there shall be provided and maintained, a suitable room or rooms for the use of children under the, age of six years of such female workers. xxx xxx xxx 36. First-aid.-Every employer shall provide in all the places where building or other construction work is carried on such first-aid facilities as may be prescribed. xxx xxx xxx 38. Safety Committee and safety officers.-(1) In every establishment wherein five hundred or more building workers are ordinarily employed, the em....
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....onstruction work at the site; (h) the approximate duration of the work; (i) such other matters as may be prescribed. (2) Where any change occurs in any of the particulars furnished under subsection (1), the employer shall intimate the change to the Inspector within two days of such change. (3) Nothing contained in sub-section (1) shall apply in case of such class of building or other construction work as the appropriate Government may by notification specify to be emergent works." 10. A perusal of the various provisions of the BOCW Act makes it amply clear that the said Act has been enacted for the welfare of only building and other construction workers and to make adequate provisions for their safety, health and financial security. 11. The Cess Act has been enacted to provide for the levy and collection of cess on the cost of construction incurred by employers, with a view to augment the resources of the Building and Other Construction Workers' Welfare Boards, constituted under the BOCW Act. 12. Section 3(1) of the Cess Act, which is the charging section, provides for the levy and collection of a Cess for the purposes of the BOCW Act, at such rate not exceeding two....
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....rn has not been furnished to the officer or authority under sub-section (2) of Section 4, he or it shall, after making or causing to be made such inquiry as he or it thinks fit, by order, assess the amount of cess payable by the employer. (3) An order of assessment made under sub-section (1) or sub-section (2) shall specify the date within which the cess shall be paid by the employer. 6. Power to exempt.-Notwithstanding anything contained in this Act, the Central Government may, by notification in the Official Gazette, exempt any employer or class of employers in a State from the payment of cess payable under this Act where such cess is already levied and payable under any corresponding law in force in that State. 7. Power of Entry - Any officer or authority of the State Government specially empowered in this behalf by that Government may-- (a) with such assistance, if any, as he or it may think fit, enter at any reasonable time any place where he or it considers it necessary to enter for carrying out the purposes of this Act including verification of the correctness of any particulars furnished by any employer under section 4; (b) do within such place anything neces....
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....n thirty days of the date on which assessment of cess payable is finalised, whichever is earlier, to the Cess Collector. (2) Notwithstanding the provisions of sub-rule (1), where the duration of the project or construction work exceeds one year, cess shall be paid within thirty days of completion of one year from the date of commencement of work and every year thereafter at the notified rates on the cost of construction incurred during the relevant period. (3) Notwithstanding the provisions of sub-rule (1) and sub-rule (2), where the levy of cess pertains to building and other construction work of a Government or of a Public Sector Undertaking, such Government or the Public Sector Undertaking shall deduct or cause to be deducted the cess payable at the notified rates from the bills paid for such works. (4) Notwithstanding the provisions of sub-rule (1) and sub-rule (2), where the approval of a construction work by a local authority is required, every application for such approval shall be accompanied by a crossed demand draft in favour of the Board and payable at the station at which the Board is located for an amount of cess payable at the notified rates on the estimated ....
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....n furnished and, if he is satisfied about the correctness of the particulars so furnished, he shall make an order of assessment within a period not exceeding six months from the date of receipt of such information in Form I, indicating the amount of cess payable by the employer and endorse a copy thereof to the employer, to the Board and to the Cess Collector and despatch such order within five days of the date on which such order is made. (2) The order shall inter alia, specify the amount of cess due, cess already paid by the employer or deducted at source and the balance amount payable and the date, consistent with the provision of Rule 4, by which the cess shall be paid to the Cess Collector. (3) If on scrutiny of information furnished, the Assessing Officer is of the opinion that employer has undercalculated or miscalculated the cost of construction or has calculated less amount of cess payable, he shall issue notice to the employer for assessment of the cess. (4) On receipt of such notice the employer shall furnish to the Assessing Officer a reply together with copies of documentary or other evidence in support of his claim, within fifteen days of the receipt of the n....
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....ating the details of works undertaken, names of the Act or corresponding law in force in that State under which he is liable to pay cess for the welfare of the construction workers and amount of cess actually paid along with the date of such payment and proof thereof. A copy of such application shall be endorsed to each of the Assessing Officer and the board concerned. (2) On receipt of such application, the Central Government may, if it feels necessary, seek a report from the State Government concerned. (3) On examining the grounds, facts and merits of such application the Central Government may, by notification in the Official Gazette, issue an order exempting the employer or class of employers, as the case may be, from payment of cess payable under the Act where such cess is already levied and payable under such corresponding law. (4) Assessment proceedings shall be stopped by the Assessing Officer for a period of thirty days commencing from the date of the receipt of a copy of the application under sub-rule (1) to him, or till the order of the Central Government under sub-rule (3) is conveyed to an employer or class of employers who made the application under sub-rule ....
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.... the order of the Assessing Officer or if in his opinion the assessment was wrong or on the higher side shall modify the order of assessment or if in his opinion the assessment is on the lower side or if the basis of assessment is wrong, it shall remand back the assessment order to the Assessing Officer along with his observations to rectify the wrong. (6) An order remanded back under sub-rule (5) shall be disposed of by the Assessing Officer within one month in view of the observation made by the Appellate Authority: Provided that if the amount of cess is proposed to be enhanced the assessee shall be given an opportunity of being heard. (7) No appeal shall lie against the order of the Appellate Authority under this rule. (8) If the Appellate Authority is of the opinion that the quantum of penalty imposed is on the higher side or not correctly made it shall suitably modify or set aside the order of the Assessing Officer, as the case may be. (9) The appeal under this rule shall be disposed of by making a speaking order and a copy of such order shall be sent to each of the appellant, the Assessing Officer and the Board within five days of the date on which such order i....
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....witchyard is to be modified to accommodate Two (2), 400kV bays of 2x1000MVA, 765/400kV Transformer Bank in Double Main & Transformer Bus arrangement. 1.5.3 Electrical / Mechanical Auxiliaries & other Major Misc. works a) 2x1000kVA, 33/0/4kV Transformers b) D.G Set c) Air conditioning Plant for each building d) Lighting system for complete switchyard, buildings, streets and stores etc. e) SDH communication system & PLCC communication f) AC & DC Auxiliary Power supply system including Batteries, Battery charges, AC & DC distribution boards g) Fire Fighting equipment h) Any other work necessary for completion of sub-station" Sub-para 5 of the said letter under the sub-heading "Nature of Contract" clearly provided that the work for the 765kV sub-stations on single source responsibility, turn-key basis shall be awarded through following four separate contracts:- FIRST CONTRACT "Supply and Delivery of Equipment & Material" SECOND CONTRACT "Handling, Erection, Testing and Commissioning Works" THIRD CONTACT "Civil Works" FOURTH CONTRACT "Three years O & M" 21. In terms of the said Framework Agreement, the work was split, and covered by four separa....
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....ot relieve the Contractor of any of his responsibility/obligation under the other Contracts and no time extension shall be given to the Contractor on these grounds. The equipment/material to be supplied by the Contractor under the first Contract when installed and commissioned under the second Contract shall give satisfactory performance in accordance with provisions of the Contract. The signing of three (3) separate Contracts shall in no way dilute the insurance responsibility and obligations of the Contractor." 25. The total value of (i) the First Contract (Supply) was 2750933042.00 (Two Hundred and Seventy Five Crores Nine Lakhs, Thirty Three Thousand and Forty Two), (ii) the Second Contract (Erection) was Rs. 40129510.00 (Four Crores One Lakh, Twenty Nine Thousand Five Hundred and Ten), (iii) the Third contract (Civil) was Rs. 193808465.00 (Nineteen Crores Thirty Eight Lakhs Eight Thousand Four Hundred and Sixty Five) and (iv) the Fourth contract (Operations and Maintenance) was Rs. 35737200.00 (Three Crores, Fifty Seven Lakhs Thirty Seven Thousand and Two Hundred). 26. In this context, it would be appropriate to refer to Clause 6 of the letter dated 5th March....
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....r Schedule of Prices of respective Contract and any other item required to complete the scope of work for completion of substation including their performance and guarantees. The second Contract shall cover unloading, handling at site, erection, testing and commissioning of all the equipments and materials to be supplied by the Contractor under first Contract and any other work require to complete the scope for commissioning and handing over of the entire substation. The third Contract shall cover all Civil Works including materials to complete the scope for commissioning and handing over of the entire substation. The Contractor shall be fully responsible for timely execution of all the activities under above three (3) Contracts such that the substation is commissioned and handed over within stipulated completion period. The Contractor shall be fully responsible for the works to be executed under first three (3) Contracts and any breach or occurrence or default under one Contract shall automatically be deemed as a breach or occurrence or default of other Contracts giving the Engineer absolute right to take appropriate action under any/all the Contracts including right to reco....
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....on do not reach site up to December, 2010. tn view of turn-key nature of contract liquidated damages shall be levied only in case of delay on contractual completion period of that phase of sub-station. SCC 8.1 The prices of imported items, if any, shall be inclusive of all taxes, duties, license fees, import/custom duties etc. legally payable. Any such taxes, duties and levies shall be Contractor's account and no separate claim on this account shall be entertained by the Purchaser." 30. Pursuant to the said First Contract (Supply Contract) the Respondent submitted two performance bank guarantees on 30th August 2012, that is bank guarantee No. 2012/272 issued by Corporation Bank, Mumbai for an amount of Rs. 6092783.00 and bank guarantee No. 2012/273 also drawn on the Corporation Bank, Mumbai for an amount of Rs. 71068130/-. Respondent No. 1 duly performed the first contract under the framework agreement that is the contract for supply of equipment along with accessories and auxiliaries and other related materials and the bills raised were duly cleared. 31. Subsequently, there was an audit inspection of the 765 KV Transmission Division, Unnao for the peri....
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....es towards cess. Later, the Respondent No. 1 extended the validity of the bank guarantee until 30th November, 2018, and further extended the bank guarantee till February 2019. 38. In the meanwhile, by a letter dated 1st June 2018, the Superintending Engineer, UPPTCL informed the Respondent No. 2 Corporation Bank that consequent upon successful performance of the transformer and isolators supplied by the Respondent No. 1, the bank guarantees against the first (supply) contract were partly discharged as detailed in the said letter. The Bank was instructed to retain an amount of Rs. 2,60,68,814/- from BG No. 2012/2 dated 30.8.2012 of Rs. 7,10,68,130/- and issue an amended Bank Guarantee extending its validity. 39. By a letter dated 29th December 2018, the Superintendent Engineer of the UPPTCL requested the Executive Engineer, Unnao to recover labour cess for the supply part of the composite contract from the pending bills of the Respondent No. 1 and, in case any amount still remained outstanding, to deduct such amount by encashment of the Performance Bank Guarantee for Rs. 2,60,68,814/- held to secure the payment of labour cess. 40. On or abo....
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....pecial Conditions of Contract or the General Conditions for Supply of Plant and the Execution of work which enables UPPTCL to withhold any amount from the bills raised by the Respondent No. 1 on UPPTCL towards any taxes, cess or any other statutory dues of the contractor. Nor has the UPPTCL adverted to any specific provision of the contract which enables UPPTCL to do so. Clause 8.1 of the Special Conditions of Contract relied upon by UPPTCL reads that the prices of imported items, if any, shall be inclusive of all taxes, duties, licence fees, import/customs duties etc. legally payable. Any such taxes, duties levies shall be on Contractor's account and no separate claim on the Account shall be entertained by the purchaser. This clause does not authorize UPPTCL to deduct taxes etc. from bills. 46. Clauses 24, 25 and 26 of the General Conditions for Supply of Plant and Execution of Works to the UPPTCL provide as follows:- "24. Deduction from Contract Price :- All costs, damages or expenses, which the Purchaser may have paid, for which under the Contract, the Contractor is liable, may be deducted by the purchaser from any money due or which may become due by him to the Contract....
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....l risk. For such storage the Purchaser shall pay to the Contractor at a rate to be mutually agreed upon between the parties, but not exceeding 5s (five Shillings) per ton per week payable quarterly, plus interest at one percent per annum above the current rate of the State Bank of India on 80% of the Contract value of the plant or portion thereof so stored, for the period from the date on which the said plant or portion becomes, due and is ready for shipment upto the date on which it is actually shipped. (A) In the event of the Supplier/Contractor/Company not being able to supply the materials or to carry out works in accordance with the terms of this Contract, the Government/Purchaser/Owner shall have the right to recover any sum advanced in accordance with the Clause 25 from the Supplier/Contractor/Company and from his/its assets. 26. Provisional Sums :- In any case where the Contract price includes a provisional sum to be provided by the Contractor for meeting the expenses of extra work or for work to be done or materials to be supplied by a sub-Contractor, such sum shall be expended or used, either wholly or in part, or be not used at the discretion of the Engineer and en....
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.... "The background in which the BOCW Act was enacted, is set out in the Statement of Objects and Reasons appended to the Bill preceding its enactment. To better appreciate the legislative intent, it would be instructive to refer to the following extract from the Statement of Objects and Reasons: It is estimated that about 8.5. Million workers in the country are engaged in building and other construction works. Building and other construction workers are one of the most numerous and vulnerable segments of the unorganized labour in India. The building and other construction works are characterized by their inherent risk to the life and limb of the workers. The work is also characterized by its casual nature, temporary relationship between employer and employee, uncertain working hours, lack of basic amenities and inadequacy of welfare facilities. In the absence of adequate statutory provisions, the requisite information regarding the number and nature of accidents is also not forthcoming. In the absence of such information, it is difficult to fix responsibility or to take any corrective action. Although the provisions of certain Central Acts are applicable to the building and o....
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.... collected at source from the bills of the contractors to whom payments are made by the owner. In short, the burden of Cess is passed on from the owner to the contractor. 50. In Lanco Anpara Power Limited v. State of Uttar Pradesh and Ors. Reported in (2016) 10 SCC 329, this Court held:- "37. We now advert to the core issue touching upon the construction of Section 2(1)(d) of the BOCW Act. The argument of the appellants is that language thereof is unambiguous and literal construction is to be accorded to find the legislative intent. To our mind, this submission is of no avail. Section 2(1)(d) of the BOCW Act dealing with the building or construction work is in three parts. In the first part, different activities are mentioned which are to be covered by the said expression, namely, construction, alterations, repairs, maintenance or demolition. Second part of the definition is aimed at those buildings or works in relation to which the aforesaid activities are carried out. The third part of the definition contains exclusion clause by stipulating that it does not include "any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the....
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....nes etc. Mere installation and/or erection of pipelines, equipments for generation or transmission or distribution of power, electric wires, transmission towers etc. which do not involve construction work are not amenable to Cess under the Cess Act. Accordingly no intimation or information was given or any return filed with the Assessing Officer under the Cess Act or the Inspector under the BOCW Act in respect of the First and Second Contracts, either by UPPTCL or by the Respondent No. 1. 54. A contractor who enters into a pure Supply Contract is statutorily exempted from levy under the BOCW Act. The Contract in question is a Supply Contract as would be evident from Clause 8.7 of the Special Conditions of Contract which states: "The contract shall be a 'Divisible Contract' with single point responsibility, hence no works Contract tax shall be payable and the Purchaser shall not bear any liability on this account." 55. Mr. Ramesh Singh appearing on behalf of the Respondent No. 1 submitted and rightly, that the four contracts had been treated as a singular contract solely for the purposes of responsibility for timely execution. For all other intents and purposes, inclu....
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....text, reference may also be made to the decision of this Court in Arun Kumar Agrawal v. Union of India and Others reported in (2013) 7 SCC 1, where this Court held:- "56. CAG may be right in pointing out that public monies are to be applied for the purposes prescribed by Parliament and that extravagance and waste are minimised and that sound financial practices are encouraged in estimating and contracting, and in administration generally. xxx xxx xxx 67. The question that is germane for consideration in this case is whether this Court can grant reliefs by merely placing reliance on the CAG's Report. The CAG's Report is always subject to parliamentary debates and it is possible that PAC can accept the ministry's objection to the CAG Report or reject the report of the CAG. The CAG, indisputably is an independent constitutional functionary, however, it is for Parliament to decide whether after receiving the report i.e. PAC to make its comments on the CAG's Report." 62. In Pathan Mohammed Suleman Rehmatkhan v. State of Gujarat and Others reported in (2014) 4 SCC 156, this Court held:- "9. We heard Shri Y.N. Oza, the learned counsel for the petitioner and peru....
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.... Court in Centre for Public Interest Litigation v. Union of India [(2012) 3 SCC 1 : AIR 2012 SC 3725], wherein it was held that when the CAG report is subject to scrutiny by the Public Accounts Committee and the Joint Parliamentary Committee, it would not be proper to refer to the findings and conclusions contained therein. The Court even went on to say that it is not necessary to advert to the reasoning and suggestions made, as well." 63. In this Case, there is apparently no dispute, difference or controversy between UPPTCL and the Respondent No. 1 as to the true construction, meaning or intent of any part of the conditions of contract or to the manner of execution or the quality or description or payment for the same. Nor is there any dispute as to the true meaning, intent, interpretation, construction or effect of the clauses of contract, specifications or drawings or any of them. UPPTCL has changed its stand only after the CAG report. Cess in respect of of the First Contract has been deducted only in view of the audit objection raised by the Office of Comptroller and Auditor General (CAG). 64. The initial stand of UPPTCL will appear from the relevant portion of the CAG ....
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....etween solicitor and clients or as between party and party and to direct by whom and to whom and in what manner the same shall be borne and paid. Work under the contract shall, if reasonably, possible, continued during the Arbitration proceedings and no payments due to payable by the UPPTCL shall be withheld on account of such proceeding. In case refusal/neglect by such nominee Chairman, UPPTCL may nominate another person in his place." 66. Even though there is an arbitration clause, the Petitioner herein has not opposed the writ petition on the ground of existence of an arbitration clause. There is no whisper of any arbitration agreement in the Counter Affidavit filed by UPPTCL to the writ petition in the High Court. In any case, the existence of an arbitration clause does not debar the court from entertaining a writ petition. 67. It is well settled that availability of an alternative remedy does not prohibit the High Court from entertaining a writ petition in an appropriate case. The High Court may entertain a writ petition, notwithstanding the availability of an alternative remedy, particularly (1) where the writ petition seeks enforcement of a fundamental right; (ii) wher....