POWER POINT PRESENTATION ON

LABOUR CESS

T.RAJA SRINIVASA REDDY

DIVISIONAL ACCOUNTS OFFICER(w)
CELL. NO.9866494069
Contents of PPT ON RECOVERY OF
LABOUR CESS
TITLE OF THE RELATED ACTS AND RULES

AIM OF THE BOCW ACT 1996( MAIN ACT No.27/1996)

AIM OF THE BOCW CESS ACT 1996 (Ancillary Act
No.28/1996)
IMPORTANT SECTIONS OF THE BOCW Act 1996
IMPORTANT SECTIONS OF THE BOCW CESS Act 1996

Executive Instructions
Board of CEs Minutes dated 05-10-2016
 Index
WP No.4587/2008 before HC of AP Orders Dated
15-07-2008 (favourable to the Government)
WP No.11269/2009 before HC of AP Orders
Dated 22-09-2009 (favourable to the
Contractors)
WP No.9111/2010 before HC of AP Orders dated
28.11.2013 (favourable to the contractors)
W.A.No.1012/2013 before HC of AP Orders
Dated 06-08-2015 (Favourable to the
Government)
 ACTS AND RULES
1.The Building and Other Construction Workers
(Regulation of Employment and Conditions of Service)
Act, 1996 ('BOCW Act').
2. The Building and Other Construction Workers'
Welfare Cess Act,1996
3. The Building and Other Construction Workers
(Regulation of Employment and Conditions of Service)
Central Rules, 1998 ('Central Rules')
4. The Building and Other Construction Workers'
Welfare Cess Rules, 1998 ('Cess Rules')
5. The AP Building and Other Construction Workers'
(Regulation of Employment and Conditions of Service)
Rules, 1999(Go.Ms.No.69LET&F Lab.II, 1
dt.03.12.1999).
 AIM OF THE BOCW ACT 1996

An Act 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.

NOTE:- Recovery of cess will not come under the

purview of this Act .There is a separate Act The
Building and other construction Workers Welfare
Cess Act 1996 which is ancillary act to the BOCW
Act 1996.
2
5
 AIM OF THE CESS ACT

Levy of cess on the cost of construction incurred by the

owner ,employer of the building and other construction
works is required for ensuring sufficient funds for the
Welfare Boards to undertake the social security Schemes
for the welfare of the Building and other construction
workers.

6
 IMPORTANT PROVISIONS OF THE MAIN ACT

Section 1(4) makes it clear that the BOCW Act: applies to every
establishment which employs, or had employed on any day of the
preceding twelve months, ten or more building workers in any
building or other construction work
NOTE:-Government of AP Irrigation & CAD (PW-Reforms) Department vide
Memo No.636/Reforms-A1/2008, dt.08.06.2011 have stated that the department
shall include 1% cess in the estimates for the works which they proposed to under take, if the
work continues for or beyond 12 months and involves engagement of 10 workers or more. In the
Cess Act no such provision is available to make provision in the estimate.The Section 1(4) is
only applies for registration of Establishment and not for any exemption from payment of cess.
As per Cess Act the contractor has to bear the liability of the Cess from their work bills. Hence
no provision is necessary in the estimate .Hence the Government Memo needs to be modified

3
 DEFINITION OF BUILDING AND OTHER CONSTRUCTION
WORKS

Section 2(d) "building or other construction work" means 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 communications,
dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts, pipelines,
towers, cooling towers, transmission towers and such other as may be specified in this behalf
by the appropriate Government, by notification but does not include any building or other
construction work to which the provisions of the Factories Act, 1948 (63 of 1948) or the
Mines Act, 1952, (35 of 1952) apply;

EXCEPTION:-The works to which the provision of the Factories Act 1948 or the
Mines Act 1952 applies, the provisions of the BOCW Act 1996 will not apply .
The Act applies to all the Department such as Irrigation, PR, R&B,PH,RWS
Corporations etc., to which the provisions of Factories Act and Mines Act will not
apply. 4
8
 contractor who is the employer/owner for Government works is liable to pay the cess

Section 2(g) contractor' means a person who undertakes to produce a given result for any establishment, other
than a mere supply of goods or articles of manufacture, by the employment of building workers or who supplies
building workers for any work of the establishment; and includes a sub-contractor;
Section 2(i) "employer", in relation to an establishment, means the owner thereof, and includes,-
(ii) in relation to a building or other construction work carried out by or under the authority of any department
of the Government, directly without any contractor, the authority specified in this behalf, or where no authority
is specified, the head of the department;
(iii) in relation to a building or other construction work carried on by or on behalf of a local authority or other
establishment, directly without any contractor, the chief executive officer of that authority or establishment;
(iv) in relation to a building or other construction work carried on by or through a contractor, or by the
employment of building workers supplied by a contractor, the contractor;

NOTE:_From the definition as per section 2(i)(iv), the liability to pay the CESS
falls on the CONTRACTOR because the works are being carried out through
the Contractor, Hence the contractor is the employer and owner for the
Purpose of Labour Cess .Even in the Minutes of the meeting dated 27-08-
2011 convened by the Principal Finance secretary, they came to a conclusion
that the Labour cess is to be recovered from the bills of the Contactors and no
need to provide any provision in the estimates .

9
 BASIS FOR THE GENESIS OF THE CESS ACT
Section 2(j) "establishment" means any establishment belonging to, or under the control of, Government, any
body corporate or firm, an individual or association or other body of individuals which 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;

Section 2(k) "Fund" means the Building and Other Construction Workers' Welfare Fund of a Board constituted
under Sub-section (1) of Section 24.
Section 18. Constitution of State Welfare Boards:-(1) Every State Government
shall, with effect from such date as it may, by notification, appoint, constitute a Board to
be known as the . (name of the State) Building and Other Construction Workers
Welfare Board to exercise the powers conferred on, and perform the functions assigned
to it, under this Act.
Section 24. Building and other Construction Workers Welfare Fund and its
application:-(1) There shall be constituted by a Board a fund to be called the Building
and Other Construction Workers Welfare Fund and there shall be credited thereto (a)
any grants and loans made to the Board by the Central Government under section 23;
(b) all contributions made by the beneficiaries; (c) all sums received by the Board from
such other sources as may be decided by the Central Government.

NOTE:- The Genesis for Cess Act has its root from the section 24 of the Act
27/1996.According to that section it is necessary raise the FUND to meet the
Expenditure on the welfare of the BOC(Building and Other Construction )
workers by constituting the BOARD which falls under Section 18 of the Main
Act..

10
IMPORTANT PROVISIONS
OF CESS ACT 1996
2. DEFINITIONS.
3.LEVY AND COLLECTION OF CESS
4. FURNISHING OF RETURNS.
5. ASSESSMENT OF CESS.

11
While the term "Board" is defined by Section 2(a) of the Cess Act to mean the Board
constituted by the State Government, Section 2(d) of the Cess Act adopts all of the
definitions contained in the BOCW Act and reads as under:
2 (d) words and expressions used herein but not defined and defined in the Building and
Other Construction Workers (Regulation of Employment and Conditions of Service) Act,
1996 shall have the meanings respectively assigned to them in that Act.

Section 3 of the Cess Act, which is its charging section, reads as under:
3. Levy and collection of cess:
(1) There shall be levied and collected a cess for the purpose of the Building and Other
Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996,
at such rate not exceeding two per cent, but not less than one per cent of the cost of
construction incurred by an employer, as the Central Government may, by notification in
the Official Gazette, from time to time specify.

12
(2) The cess levied under Sub-section (1) shall be collected from every
employer in such manner and at such time, including deduction
at source in relation to a building or other construction work of a
Government or of a public sector undertaking or advance collection
through a local authority where an approval of such building or other
construction work by such local authority 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 levied 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.

13
The Central Government has, by virtue of the power under
Section 14 of the Cess Act, made the Building and Other
Construction Workers' Welfare Cess Rules, 1998 ('Cess
Rules'). Rule 3 defines the cost of construction for the
purpose of levy of cess as under:
3. Levy of Cess - For the purpose of levy of cess under
Sub-section (1) of Section 3 of the Act, cost of
construction shall include all expenditure incurred by an
employer in connection with the building or other
construction work but shall not include-
cost of land any compensation paid or payable to a worker
or his kin under the Workmen's Compensation Act, 1923.

14
Rule 4 of the Cess Rules makes it mandatory for deduction of cess payable at the notified rates
from the bill paid for the "building and other construction work of a Government or a Public
Sector Undertaking
The BOCW Act and the Cess Act break new ground in that the liability to pay cess falls not only
on the owner of a building or establishment, but under Section 2(i)(iii) and (iv) of the BOCW
CESS Act "in relation to a building or other construction work carried on by or through a
contractor, or by the employment of building workers supplied by a contractor, the contractoris
liable to pay the CESS.
The Cess Act and the Cess Rules ensure that the
cess is collected at source from the
bills of the contractors to whom payments are made by the owner. The law
acknowledges the fact that, in effect, the burden of the cess is passed on by the owner to the
contractor.
Note:- In all the cases of works contract(where the works are being carried out through the
Contractor) it is the contractor who is the employer for the Purpose of Labour Cess Act 1996.
Even in the Miniutes of the meeting dated 27-08-2011 convened by the Principal Finance
secretary, they came to a conclusion that the Labour cess is to be recovered from the bills of the
Contactors and no need to provide any provision in the estimates .

15
 Exempted works from the
purview of
Labour cess Act
In view of the definition of construction work defined in
Section 2(d) of the Act all types of constructions, erections,
installations are included. The activities which have been
excluded are any building or other construction work to
which the provisions of the Factories Act, 1948 (63 of
1948) or the Mines Act, 1952, (35 of 1952) apply. Thus
virtually every construction work carried will attract CESS.

16
2. What is the liability of Contractor for payment of Labour CESS?

Liability had been cast upon the contractor to pay the CESS, if the
work is of State Government or Central Government, but in other
cases the liability to pay CESS is on owner as also on contractor.
Thus it will depend upon the language employed in the contract
entered between employer and contractor as to who will pay the
amount of CESS.

17
 EXECUTIVE INSTRUCTIONS ON
RECOVERY OF LABOUR CESS
The Andhra Pradesh Building and Other
Construction Workers (Regulation of Employment
and conditions of Service) Rules, 1999 have been
framed under the Main Act vide G.O.Ms.No.69,
Labour, Employment, Training and Factories
(Lab.II) Department, dated.3.12.1999, which have
been amended vide G.O.Ms.No.57, LET & F (Lab.II)
dt.26.6.2007; and the Andhra Pradesh Building and
Other Construction Workers Welfare Board has
been constituted by the Government vide
G.O.Ms.No.41, LET & F (Lab.II) Dt.30.4.2007.

18
 CONTENTS OF GO.MS.NO.111 LET&F (LAB.II)
DEPARTMENT, DT.15.12.2009 AND GO.MS.NO.112
LET&F (LAB.II) DEPARTMENT, DT.15.12.2009

The Government of AP have issued instructions to The

Director of Treasuries and to the Director of work Accounts
to convey instructions to subordinate officers not to admit
the Bills pertaining to works covered by the definition of
Building and Other Construction Activity unless deduction
is made towards Cess.

The Government have also instructed all the Drawing and Disbursing
Officers of the State and all the Government agencies to collect 1% Cess on
the Cost of Construction defined as per Section 3 of the Cess Act and Rule 3
of the Rules made there under, with effect from 26.06.2007 i.e., the day on
which the AP Building and Other Construction Welfare Board is constituted
NOTE:- In the said two G.Os which are issued by the
Labour deptt it is clear that the cess shall be recovered from
the bills of the Contractor only.
19
CONTENTS of the GOAP FINANCE WORKS AND PROJECTS
DEPARTMENT U.O.NOTE.NO.4763/PFS.F8(A1/07-1),
DT.04.02.2008 & U.O.NOTE.NO.4763/PFS.F8(A1/08-4,
DT.28.02.2008

20
Contents of Government of AP i & CAD (PW-Reforms)
Department Memo No.636/Reforms-A1/2008, dt.08.06.2011

In the said memo the Government have issued the following orders on levy
of 1% towards labour cess making them applicable to all the Engineering
Departments.
(i)In respect of ongoing works, wherever agreements do not contain the
clause relating to the condition of the Building and other construction
Workers Cess Act, an amount of @ 1% of the amount will be added to the
estimates and the estimates revised accordingly for all payments made after
26.6.2007.
(ii) In respect of agreements which provide that the Contractor shall pay
Cess at the rate not exceeding 2% of the cost of Construction under the
Building and other Construction Workers Cess Act, 1996, the Contractor
has no option but to Pay Cess by way of deduction at source effective from
26.6.2007.

21
(iii) The department shall include 1% cess in the estimates for the works which they proposed to under
take, if the work continues for or beyond 12 months and involves engagement of 10 works or more
(iV) The levy of labor cess shall be on the cost of construction incurred by the employeer only duly
excluding the cost of the land and the compensation paid or payable to a worker or his kin under the
workmens compensation act 1923 and not on the entire value of the work.
(v) The department shall not deduct any amount towards cess unless the corresponding amount is inclued
in the estimates i.e necessary provision may be incorporated in the revised estimates.
(vi) Supplemental agreements may be concluded with the contractors/agencies, whereever required to
effect the recovery towards labour cess duly providing provision in the revised estimate

Note:- In all cases of works contract(where the works are being carried out through
the Contractor) it is the contractor who is the employer for the Purpose of Labour
Cess Act 1996. Even in the Minutes of the meeting dated 27-08-2011 convened by
the Principal Finance secretary, they came to a conclusion that the Labour cess is to
be recovered from the bills of the Contactors and no need to provide any provision in
the estimates
In the meeting it was accepted and requested the I &CAD department to take action
to modify /cancel the Government Memo Dated 08-06-2011.But so far no action is
take in this regard .In the I& CAD department still the provision is being made in the
estimate for adding the same to the bills and to effect the recovery from the bills like
VAT NAC Seigniorage which is not correct and violation to the provisions of the
Labour Cess Act .In R&B and PR department no provision is being made in the
estimates and recovery is being made from the bills. 22
 CONTENTS OF THE MINUTES OF THE
MEETING, DT.27.08.2011 CONVENED BY
THE PRINCIPAL, FINANCE SECRETARY
REGARDING COLLECTION OF LABOUR CESS

The principal secretary, R&B stated that it is clear from the

act that in respect of works contract of Government or PSU,
employer is the contractor, the responsibility to pay the
labour cess is on the contractor (who is the employer) and
recovery of the amount from the bills of the contractor and
remitting to the board is the responsibility of the
Government/P SU.After thorough and in depth deliberations
the following course of action was agreed upon
An appeal is to be filed by I&CAD department
comprehensively considering all the issues in various
Judgements particularly orders passed in WP
No.11269/2009 and batch dt.22.10.2009
(Action..I&CAD Dept)
23
(ii) There is no necessity of amending Go.Ms.No.94, I&CAD department, dt.01.07.2003
(iii) I&CAD Department may suitably modify/withdraw memo.no.636/reforms/A1/2011,
dt.08.06.2011
(Action..I&CAD Dept)
(iv) To withdraw the instructions issued in the U.O.NOTE.NO.4763/PFS.F8(A1/07-1),
DT.04.02.2008 & U.O.NOTE.NO.4763/PFS.F8(A1/08-4, DT.28.02.2008 in consultation with
the GP (Action..Fin(W&P) Dept)
(v) I&CAD was requested to take further action on the common stand taken by all the
Engineering Departments, if necessary in consultation with the Law department and Advocate
General
(Action..I&CAD Dept)
Note:- The I &CAD Deptt has not taken any action so far. The
Principal Secretary Rand B Department vide Memo dated 01-02-
2013 has communicated the Minutes to all the CEs and ENCs to
recover the LC @1% and to file the Writ Appeals keeping in view
the orders of the Honble High Court of AP dated 02-02-2012 in
W.P.No..10615/2010 and on the lines of WA filed in WP
NO.11269/2009
The ENC PR has also issued instruction vide Memo dated 12-02-
2013 to recover the labour cess from the contrctors without adding
24
 CONTENTS OF ENGINEER-IN-CHIEF,
PANCHAYATH RAJ
Memo.no.T2/Labourcess/2011-12,
(i) 1% labourdt.12.02.2013
cess need not be added in
the estimates and estimates need not
be revised
(ii) 1% labour cess need not be added in
the estimates of ongoing works.
(iii) The amount deducted may not be
released to the contractos as advised by
the Finance Dept

25
 DIRECTOR GENERAL VIGILANCE AND
ENFORCEMENT Government of AP Memo No.1(1395-
4/V&E/E1/2015) Dated 21.05.2016
The DG has reiterate the contents of the GO.Ms.No.111 Dated 15-12-2009 of
the Labour Dept wherein it was ordered to recover the Labour Cess @1%
from the bills payable to the Contractors.w.e.f 26-06-2007
.The DG has also mentioned the It was abundantly clear that payment of
labour cess is the responsibility of the contractor (who is the employer of
works contract) and deduction from the bills and remittance to the board is
the responsibility placed on the Government.
The DG has also referred the judgement of the Honble HC in WP No.4587 of
2008 and writ appeal No.94 of 2015 which are infavor of the Government.
The DG has also referred the decision taken in the Meeting Convened by
the Principal secretary Finance department on 27-08-2011 wherein it was
decided to not to provide provision in the Estimate towards Labour Cess and
decided to recover from the Contractor.
The DG has ultimately requested the Chief engineer PH department to issue
innstuction to all the subordinate officials to follow the above guidelines.

26
 Contents of the Finance Secretary
U.O.Note Dated 22-04-2016

The Secretary to the Government Finance Department has informed to the

Labour department and Water resource Department AP secretariat with a
request to raise Demand against the Writ Petitioners as the WA filed by the
Government vide W.A.No 1012/2013 and batch are allowed by the HC of AP
vide orders dated 06-08-2015 and set aside the orders passed in the WP
No.9111/2010 and batch Dated 28-11-2013

Note:-Where the Labour cess is not recovered from the bills of the any
contractors due to the orders of the Honble Hc of Ap in the WPs or
the recovered LC amount is refunded to the contractors, the same
shall be recovered from the petitioners by raising the demand notice
as the orders passed earlier are set aside.
 MINUTES OF THE BOARD OF
THE CHIEF ENGINEERS DATED
05-10-2016
 Comment on the decision of the
BOCE
The BOCEs have not made in depth deliberation before
coming to a conclusion for denying the advise of the Director
General, Vigilance and Enforcement as the Act is explicitly
said that the employers/owner means the Contractor to whom
the work was awarded by the Department. The liability of the
Cess is to be born by the Contractor who is the employer. The
Principal secretary Finance department during the meeting
held on 27-08-2011 after thorough study of the cess Act
and judgements pronounced by the Honorable Court it was
decided not to provide provision in the Estimate as it is
recoverable from the bills of the Contractor. Therefore the
BOCE decision is to be re-examined to avoid loss to the state
Exchequer and undue advantage to the Contractor.

30
 HISTORY OF THE LITIGATION ON RECOVERY OF
LABOUR CESS RECOVERY(FAVOURABLE TO THE
GOVERNMENT)
WP.NO.4587 of 2008 filed before the honorable H.C of A.P by M/s
Coramandal Prestcrete pvt limited vs Govt of AP represented by I&CAD
department, APSIDC, Secretary, Finance & Planning, PAO, Mahaboobnagar.
RELIEF Sought BY THE PETITIONERS
Aggrieved by the recovery of labour cess as per the orders issued by the
Finance Department in U.O.Note.No.4763/PFS, F8(A1/07-1, dt. 04 .02 .
2008), the contractor filed WP to direct the respondents not to deduct cess
at 1% from the payments .The petitioners contended that the Department
should not precede with assessment, determination of liability and notice
to show cause as to why the LC should not be recovered and alleged that
the impugned U.O.Note as illegal and arbitrary

31
 STAND TAKEN BY THE RESPONDENTS

The Department submitted that since the provisions of Section

3(2) of the Cess Act and Rule 4(3) of the Rules made there under,
empower the respondents to levy and deduct 1% labour cess at
source from the bills payable to the contractors, no prior
assessment is required to be made before seeking to
collect/recover 1% labour cess from the bills of the contractors.
The deptt submitted that since the petitioners by executing the
agreements/contracts, in Clause 69 have agreed that they would
comply with all the labour regulations in force, and having regard
to the fact that at the time when the petitioners entered into
agreements/contracts with the respondents, the Cess Act had already
come into force, except for the constitution of the Welfare Boards, the petitioners
can not contend that since there was no mention about collection/recovery of 1%
labour cess in terms of the Cess Act in the agreements/contracts, the respondents
are not entitled to levy and collect the 1% labour cess from the bills of the
petitioners.
32
. The Deaprtment submitted that except for the
agreements/contracts entered into prior to the constitution of the
Welfare Boards in Andhra Pradesh, in all other subsequent
agreements, the clause relating to implementation of the major
labour legislations, including Cess Act is incorporated in Clause
70(o) of the agreements. The Dept submitted that no fault can be
found with the action of the Government in issuing the impugned
Memo seeking to collect/recover 1% labour cess in terms of the
Cess Act from the bills payable to the petitioners, and prayed that
the writ petitions be dismissed

33
 CLAUSE NO.69 OF THE AGREEMENT

During continuance of the contract, the contractor and his sub-contractors shall
abide at all times by all existing labour enactments and rules made thereunder,
regulations, notifications and bye-laws of the State or Central Government or
local authority and any other labour law (including rules), regulations, bye laws
that may be passed or notifications that may be issued under any labour law in
future either by the State or the Central Government or the local authority and
also applicable labour regulations, health and sanitary arrangements for
workmen, insurance and other benefits. Salient features of some of the major
labour laws that are applicable to construction industry are given below. The
contractor shall keep the Department indemnified in case any action is taken
against Department by the competent authority on account of contravention of
any of the provisions of any Act or rules made thereunder, regulations or
notifications including amendments. If the Department is caused to pay or reimburse, such amounts as
may be necessary to cause or observe, or for nonobservance of the provision stipulated in the
notifications/bye laws/Acts/Rules/regulations including amendments, if any, on the part of the
contractor, the Engineer-in-Charge/Department shall have the right to deduct any money due to the
contractor including his amount of performance security. The Department/Engineer-in-Charge shall
also have right to recover from the contractor any sum required or estimated to be required for
making good the loss or damage suffered by the Department. The employees of the Contractor and the
sub-contractor in no case shall be treated as the Department of the Department at any point of time.
 CLAUSE 70 (O) OF THE
AGREEMENT
The Building and Other Construction Workers (Regulation of
Employment and Conditions of Service) Act, 1996 and the
Cess Act of 1996: All the establishments who carry on any
building or other construction work and employs 10 or more
workers are covered under this Act. All such establishments
are required to pay cess at the rate not exceeding 2% of the
cost of construction as may be modified by the Government.
The Department of the establishment is required to provide
safety measures at the Building or construction work and
other welfare measures, such as canteens, first-aid facilities,
ambulance, housing accommodation for workers near the
work place etc. The Department to whom the Act applies has
to obtain a registration certificate from the Registering
Officer appointed by the Government.
35
 RESULT OF THE JUDGEMENT DATED 15-07-
2008
The honorable court opined that it is clear that some of the petitioners in the
agreements/contracts entered into with the respondents after 26.06.2007,
have agreed to pay labour cess at the rate not exceeding 2% of the cost of
construction, as may be modified by the government. There is no doubt,
that the above clause relating to payment of labour cess, was not present in
the agreements/contracts entered into by the petitioners with the
respondents prior to 26.06.2007, but the fact remains, the petitioners in
Clause No. 69 of the respective agreements/contracts entered into prior to
26.06.2007, have agreed to comply with all the existing labour regulations in
force, and having agreed so, they cannot contend that the respondents are
not entitled to levy and collect 1% labour cess in terms of the Workers Act
and Cess Act, which in fact, were in existence and were in force, but were not
implemented by the executive as Welfare Boards were not constituted.
Since the respondents have sought to levy and collect the labour cess in
terms of a statute, by issuing the impugned Memo, it cannot be said that the
respondents are permitted unilaterally to alter the terms and conditions of
the agreements/contracts.

36
 WP No.11269/2009 and13395, 13996, 14314, 15672,
16098, 16162, 16684, 17084, 17424, 17836, 18615,
18623, 19042, 21434, 21973, 22454, 22476, 22494 and
22605 of 2009 batch of WPs against F &P Dept , SEs of
RWS R&B,PR Department and PAOs
Claim of the Petitioners-The petitioners in this batch of
writ petitions are civil contractors registered with various departments
of Government. The departments and agencies that entrusted works to
the petitioners are taking steps to deduct cess @ 1% from the bills
payable to the petitioners. The grievance of the petitioners is that the
agencies concerned are not including the component of cess in the
estimates and are burdening them by effecting deduction of that
amount. They place reliance upon orders issued by the Government
from time to time, including U.O. Note dated 28.02.2008, through
which the finance department of Government of Andhra Pradesh
required the various departments undertaking construction works to
include cess at 1% in the estimates. These write petitions are filed with
a prayer to direct the respondents concerned to include 1% amount in
the estimates towards labour cess.
 Common orders passed by the Honble High Court
Dated 22nd October 2009
The writ petitions are disposed of directing that: -
(a) the respondents shall include 1% cess in the estimates for the
works which they propose to undertake, if the work continues for or
beyond twelve months and involves engagement of 10 workers or
more and
(b) the respondents shall not deduct any amount towards cess,
unless the corresponding amount is included in the estimates.
There shall be no order as to costs.
Note:- The stage of Writ Appeals in the WP No. 11269/2009 and batch are not
known .The Honorable H.C of AP in WP No. 4587/2008 have passed orders
on 15-07-2008 clarifying to the petitioners that they cannot find fault with the
department in recovery of labour cess as per cess act and memo dated 04-02-
2008 issued in implementation there of. Therefore the orders passed in WP no
11269/2009 is contrary to the earlier orders of the honorable High Court.The
subsequent writ appeals filed by the department wide WA no 1012/2013 to set
aside the orders passed by the honorable HC of AP are allowed.
 WP No.9111/2010 and batch(Favorable to the
Petitioner)
CLAIM OF THE PETITIONERS(L & T Ltd);-The challenge made
in the writ petitions is to the orders/decisions of respondents (Labour Commissioner of AP)
to charge 1% of the value of the contracts entered by petitioners with third respondent(RIN
Ltd) to undertake design, manufacture, supply,erect, testing and commissioning of blast
furnace-3 including civil and structural works as cess under The Building and Other
Construction Workers Welfare Cess Act, 1996 (Act 28 of 1996) as the RINL is governed by
the Factories Act 1948 which excludes from the application of Labour Cess act 1996
Judgement of the Court Dated.28-11-2013:- On an interactive analysis of various
provisions of the Act, 1948 and Acts 27 and 28 of 1996, impugned orders of the
respondents 1 and 2 in directing the petitioners to pay 1% of the contractual amount as
cess under Acts 27 and 28 of 1996 are without jurisdiction and competence and are
therefore liable to be set aside and the same are hereby set aside. Accordingly, the writ
petitions are allowed. Sequel to the same,miscellaneous petitions, if any shall stand
dismissed. No costs.

Note:-_In the WA No.1012 of 2013, the Honble High Court of AP vide orders Dated
06-08-2015 have allowed the appeals filed by the Department and set aside the
Judgement pronounced in the wp no.9111/2010 and batch.Thus the department is
empowered to recover the labour Cess from the contractors when the works are
executed through the Contract system
 W.A.No.1012/2013 and batch-orders passedon
06-08-2015.
All writ appeals are preferred either by the Commissioner of Labour or Joint
Commissioner of Labour, who were respondent No.1 or 2 in the writ petitions (for
short the Commissioner). The writ petitions were filed by Infrastructural
Development Companies/Contractors (for short the contractors)who were
given contracts for erection or raising structures/constructions such as blast
furnace within the campus of respondents-companies/corporations (for short the
Companies).
3. The writ petitions(91111/2010 and batch) were filed by the contractors
basically challenging orders of the Commissioner,charging 1% (as cess) of the
value of the contracts, executed between them and companies for designing,
manufacturing, supplying, erecting, testing and commissioning of blast furnace,
under The Building and Other Construction Workers Welfare Cess Act, 1996, (28
of 1996) (for short Act No.28).
ORDERS OF THE HC Dated 06-08-2015:-The appeals are allowed and the
judgment and order passed by the learned single Judge in the batch of writ
petitions is set aside. In view thereof, the writ petitions also stand disposed of in
terms of this judgment. No order as to costs.
conclusion

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