2022 LLR 972
ANDHRA PRADESH HIGH COURT
Hon'ble Mr. A.V. Sesha Sai, J.
W.P. No. 28861/2008, Dt/– 25-1-2022
Voltas Ltd.
vs.
Union of India through the Director General (Inspection) & Chief Labour Commissioner,
New Delhi & Anr.
BUILDINGS AND OTHER CONSTRUCTION WORKERS' WELFARE CESS ACT, 1996 – Section 3 – Levy of 1% cess – Petitioner challenged notice of Labour Enforcement Officer directing to deposit 1% cess of Work Order value – Held, work entrusted to petitioner was installation of Air Conditioning System in Airport – Civil work at Airport was done by another contractor – Activity undertaken by petitioner would not fall under the definition of building and other construction work – Installing Air Conditioning System is not included in it – Hence, impugned notice is set aside relying upon case Uttar Pradesh Power Transmission Corporation Limited v. C.G. Power and Industrial Solutions , (2021) 6 SCC 15 – Writ petition is allowed. Paras 8 to 13
For Petitioner: Mr. C.R. Sridharan, Senior Counsel.
For Respondent: Mr. N. Harinath, ASG of India, Counsel.
IMPORTANT POINTS
Judgment
A.V. Sesha Sai, J.–1. Heard Sri C.R, Sridharan, learned Senior Counsel representing Sri G.V.S. Ganesh, learned counsel for the petitioner on record, and Sri N. Harinath, learned Assistant Solicitor General of India, apart from perusing the entire material available on record.
2. In the present Writ Petition, challenge is to the notice bearing No. 42/20/08-LEO/VSP, dated 22.7.2008, issued by the Labour Enforcement Officer (Central) Maharanipeta, Visakhapatnam-second respondent herein.
3. By way of the said notice, second respondent herein requested the petitioner herein to deposit the cess @1% of the Work Order value as per section 3 of the Building and Other Construction Workers' Welfare Cess Act, 1996 (for brevity, ‘the Cess Act') and the Central Rules, 1998.
4. According to the petitioner, it is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of manufacturing, selling various kinds of equipments of machinery such as Air Conditioners, Chiller Packages, Fork Lift Trucks, Cranes, Freezers, Visi Coolers, etc, .The Airport Authority of India awarded contract in favour of the petitioner for supply, installation, testing and commissioning of Heating, Ventilation and Air-conditioning (HVAC) system at Visakhapatnam. Preceded by the inspection undertaken on 11.1.2008 and the report, dated 15.11.2008, second, respondent herein issued the impugned notice, calling upon the petitioner to pay cess @ 1% of the Work Order value as per section 3 of the above mentioned legislation. Challenging the validity and the legal sustainability of the said notice, dated 22.7.2008, the present Writ Petition came to be instituted and the composite High Court, white ordering Rule Nisi, on 31.12.2008, granted interim stay as prayed for in W.P. M.P. No. 37758 of 2008.
5. According to the learned Senior Counsel, the action impugned in the present Writ Petition, which culminated in the notice, dated 22.7.2008, is highly illegal, arbitrary, unreasonable and without jurisdiction. In elaboration, it is further contended by the learned counsel that the activity undertaken by the petitioner would not fall under the definition of building or other construction work as defined under section 2(d) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. It is also the submission of the learned counsel that the said definition does not include the work pertaining to Air Conditioning systems. It is the further submission of the learned counsel that, in respect of the work entrusted to the petitioner at New Delhi, when a similar situation arose, the appropriate authority-Deputy Labour Commissioner held that the provisions of the enactment would not apply to the petitioner.
6. In support of his submissions and contentions, learned Senior Counsel places reliance on the judgment of the Honourable Apex Court in Uttar Pradesh Power Transmission Corporation Limited v. C.G. Power and Industrial Solutions , (2021) 6 SCC 15.
7. Strongly resisting the Writ Petition, it is submitted by Sri N. Harinath, learned Assistant Solicitor General of India, that there is no illegality nor there exists any infirmity in the impugned order and, in the absence of the same, the questioned action is not amenable for any judicial review under Article 226 of the Constitution of India. In elaboration, it is further submitted by the learned Assistant Solicitor General of India that, in the instant case, construction activity and the installation of Air Conditioning System went on simultaneously, as such, the entire activity needs to be taken into consideration and, if the same is taken into consideration in such a manner, the activity undertaken in the instant case would fall under the definition of section 2(d) of the Building and Other Construction (Regulation of Employment and Conditions of Services) Act, 1996 and, as such, invocation of the provisions of section 3 of the Cess Act by the respondents herein cannot be faulted.
8. In the above background, now the issue which this Court is called upon to examine and answer in the present Writ Petition is “whether the impugned levy of cess @ 1% on the value of the work under section 3 the Cess Act is permissible”?
9. In order to regulate the employment and conditions of services 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, Parliament enacted the Building and other Construction (Regulation of Employment and Conditions of Services) Act. Sub-Section (d) of section 2 of the said legislation defines the term ‘building' or other construction work in the following manner.
“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, water courses, tunnels, bridges, viaducts, aqueducts, 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 5 any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Miners Act, 1952 (35 of 1952), apply”.
10. Obviously, in furtherance of achieving the object behind the above said legislation, Parliament also enacted the Building and Other Construction Workers' Welfare Cess Act, 1996 to provide for the levy and collection of a cess on the cost of construction incurred by employers with a view to augmenting the resources of the Building and Other Construction Workers' Welfare Boards constituted under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.
11. For the purpose of resolving the issue, in the present Writ Petition, section 3 of the said legislation gains importance. Section 3 of the Cess Act deals with the levy and collection of cess and the said provision of law reads as follows:
“(1) There shall be levied and collected a cess for the purposes of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (27 of 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.
(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 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”,
12. In the instant case, second respondent herein, in exercise of the power conferred under section 3 of the Cess Act, issued the impugned notice. Admittedly, the work entrusted to the petitioner was installation of the Air Conditioning systems in the Visakhapatnam Airport. It is also an admitted reality that civil work pertaining to the Airport was undertaken by some other contractor but not the petitioner. Therefore, the contention advanced by the learned counsel for the respondent, in the considered opinion of this Court, cannot be sustained in the eye of law. In this context, it may be appropriate to refer to the judgment cited by the learned Senior Counsel in Uttar Pradesh Power Transmission Corporation Limited's case (cited supra), wherein the Honourable Apex Court, at paragraph No. 53, held as follows:
“Cess under the Cess Act read with BOCW Act is leviable in respect of building and other construction works. The condition precedent for imposition of cess under the Cess Act is the construction, repair, demolition or maintenance of and/or in relation to a building or any other work of construction, transmission towers, in relation inter alia to generation, transmission and distribution of power, electric lines, pipelines 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”.
13. In the considered opinion of this Court, the law laid down by the Honourable Apex Court is squarely applicable to the case on hand. It is also significant to note in this context that, when a similar issue cropped up, in respect of the same company, the appropriate authority-cum-Deputy Labour Commissioner passed an order bearing No. F/18/ BOCWA/SD/2007/CD/64, date 17.7.2007, holding that the said legislation would not apply to the petitioner herein and, accordingly, notice issued was withdrawn.
14. For the aforesaid reasons, Writ Petition is allowed, setting aside the impugned notice bearing No. 42/20/08-LEONSP, dated 22.7.2008, issued by the Labour Enforcement Officer (Central) Maharanipeta, Visakhapatnam – second respondent herein. There shall be no order as to costs.
Miscellaneous petitions, if any, pending in this Writ Petition shall stand closed.