Can the cess, not collected earlier by the owner (say a PSU) from the contractor's running bills, still be collected from the subsequent/final bills? If yes, is the contractor justified in going to court/arbitration especially when at the time of tendering for the work, there was no mention of such deduction in the Notice Inviting Tender (NIT)?
Ensure there is a single line break between paragraphs.
From India, Faridabad
Acknowledge(0)
Amend(0)
Ensure there is a single line break between paragraphs.
From India, Faridabad
Acknowledge(0)Amend(0)
Please go through the allotment of the work contract carefully. I am sure there must be a clause stating that the contractor will abide by all existing labor laws. The Cess Act has been on the statute book since 1996 and, therefore, must have been in existence on the day when the work was allotted.
Best wishes,
Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
36Best wishes,
Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
Dear,
We are also to examine who is responsible for depositing the amount of cess. If the contractor does not fall within the category of the employer, then why should he pay? If yours is a PSU unit, then you must be having a Law Officer. First, ask him to go through the BOCW Cess Act, 1966, and let him give his advice on who is responsible for the deposit of cess. Then go through the agreement. See what it says and take action accordingly.
Regards,
R.N.Khola
(Labour Law & Legal Consultants)
09810405361
From India, Delhi
Acknowledge(0)Amend(0)
We are also to examine who is responsible for depositing the amount of cess. If the contractor does not fall within the category of the employer, then why should he pay? If yours is a PSU unit, then you must be having a Law Officer. First, ask him to go through the BOCW Cess Act, 1966, and let him give his advice on who is responsible for the deposit of cess. Then go through the agreement. See what it says and take action accordingly.
Regards,
R.N.Khola
(Labour Law & Legal Consultants)
09810405361
From India, Delhi
Acknowledge(0)Amend(0)
Dear,
Please go through sub-rule (3) of Rule 4 of the Cess Rules, 1998. It is the responsibility of a PSU to deduct cess from the bills of the contractor and pass it on to the State Welfare Board. In case it fails, it may have to pay from its own pocket. Upon the completion of the project, the assessment will be made, and the Assessing Officer will require you to deposit the remaining 1% of cess on the total cost of construction of the project. If you have not deducted, you can imagine - the interest is 2% p.m., and the penalty is 100% of the unpaid cess amount.
I think you should proceed to deduct.
Best of luck, Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
Please go through sub-rule (3) of Rule 4 of the Cess Rules, 1998. It is the responsibility of a PSU to deduct cess from the bills of the contractor and pass it on to the State Welfare Board. In case it fails, it may have to pay from its own pocket. Upon the completion of the project, the assessment will be made, and the Assessing Officer will require you to deposit the remaining 1% of cess on the total cost of construction of the project. If you have not deducted, you can imagine - the interest is 2% p.m., and the penalty is 100% of the unpaid cess amount.
I think you should proceed to deduct.
Best of luck, Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
Dear SHAHI, Yes, it is also applicable to Private Ltd. company. With Regards, R.N.Khola
From India, Delhi
Acknowledge(0)Amend(0)
From India, Delhi
Acknowledge(0)Amend(0)
Dear Friend, No, Establishment covered under Factories Act are expressely excluded from this Act. Regards
From India, Vadodara
Acknowledge(0)Amend(0)
From India, Vadodara
Acknowledge(0)Amend(0)
Dear Friends,
You have to pay cess on the construction of a factory building - may be new or an extension; BOCW Act is applicable until the Factories Act, 1948 becomes applicable, which happens only when the occupier gives notice to the Factory Inspector of his intention to resume the building to be used as a Factory. The premises are then inspected, and a License under the Factories Act is issued. Till then, the BOCW Act, 1996 remains applicable. Hence, in this situation, one cannot escape the payment of Cess.
In this context, you may also view the Judgment of the Hon'ble High Court reported in Labour Law Reporter "2010 LLR MP HC 165.
Wishes,
Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
You have to pay cess on the construction of a factory building - may be new or an extension; BOCW Act is applicable until the Factories Act, 1948 becomes applicable, which happens only when the occupier gives notice to the Factory Inspector of his intention to resume the building to be used as a Factory. The premises are then inspected, and a License under the Factories Act is issued. Till then, the BOCW Act, 1996 remains applicable. Hence, in this situation, one cannot escape the payment of Cess.
In this context, you may also view the Judgment of the Hon'ble High Court reported in Labour Law Reporter "2010 LLR MP HC 165.
Wishes,
Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
I have seen the MP HC judgment of Gannon Dunkerly; however, the same is vague and does not explain why Cess is payable for buildings under the Factories Act. If the definition excludes buildings under the Factories Act, then what would be exempted? If we are only expanding at the existing site where the factory is running and the expanded building will also be covered under the Factories Act, then under BOCW Cess Act, how are we liable to pay? How would you interpret the exclusion from the definition? You said, "occupier gives notice to the Factory Inspector of his intention to resume the building to be used as a Factory." Kindly clarify.
Thanks!
From India, Patiala
Acknowledge(0)Amend(0)
Thanks!
From India, Patiala
Acknowledge(0)Amend(0)
Hello dear,
Repair and maintenance are also covered within the meaning of 'building and other construction work' as per section 2(d) of the BOCW Act. This is what is exempted if it happens within a factory.
Can you call a 'Building Worker' a 'Worker' under the Factories Act? Look at the activities he is doing. He essentially fits into the definition of a building worker as per section 2(e) of the BOCW Act. Factory workers necessarily have to be associated with the manufacturing process. When a factory is being built, where is the manufacturing happening?
According to me, one should try to find logic and not a lacuna behind any legislation. The purpose of exclusion could be to avoid two sets of rules regarding worker safety, working hours, and other welfare measures, etc. The same are also available in the 1948 Act as well as the 1996 Act. The object of both Acts is to ensure health, safety, and welfare of workers while they are at work. If the BOCW Act is to be made applicable in a Factory on the activities of building and construction instead of the manufacturing activity, then which rules would you follow. It is for this purpose that the BOCW is not made applicable to building and other construction work where the provisions of the Factories Act apply.
Then there are judgments by the Apex Court of this country according to which the 'factory' is limited to the area where the manufacturing process is carried on. Thus, an office within the precincts of a factory is not included in the definition of a factory.
Under Section 7 of the Factories Act, 1948, the occupier has to give at least 15 days' notice to the Inspector before he occupies the premises to be used as a factory.
Regards and wishes,
Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
Repair and maintenance are also covered within the meaning of 'building and other construction work' as per section 2(d) of the BOCW Act. This is what is exempted if it happens within a factory.
Can you call a 'Building Worker' a 'Worker' under the Factories Act? Look at the activities he is doing. He essentially fits into the definition of a building worker as per section 2(e) of the BOCW Act. Factory workers necessarily have to be associated with the manufacturing process. When a factory is being built, where is the manufacturing happening?
According to me, one should try to find logic and not a lacuna behind any legislation. The purpose of exclusion could be to avoid two sets of rules regarding worker safety, working hours, and other welfare measures, etc. The same are also available in the 1948 Act as well as the 1996 Act. The object of both Acts is to ensure health, safety, and welfare of workers while they are at work. If the BOCW Act is to be made applicable in a Factory on the activities of building and construction instead of the manufacturing activity, then which rules would you follow. It is for this purpose that the BOCW is not made applicable to building and other construction work where the provisions of the Factories Act apply.
Then there are judgments by the Apex Court of this country according to which the 'factory' is limited to the area where the manufacturing process is carried on. Thus, an office within the precincts of a factory is not included in the definition of a factory.
Under Section 7 of the Factories Act, 1948, the occupier has to give at least 15 days' notice to the Inspector before he occupies the premises to be used as a factory.
Regards and wishes,
Jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
Dear Friend,
In addition to the opinion given by Jpratap, I would like to add and clarify that where the Factory License has been obtained, the factory is exempted from the BOCW Act. The intention of the BOCW Act is to cover the unorganized sector, such as building workers, and provide them with the umbrella of Safety, Health, and Welfare, as rightly stated by Jpratap. Once the Factory Act is applicable on the premises, it will override all other acts related to safety, welfare, and health.
Regards
From India, Vadodara
Acknowledge(0)Amend(0)
In addition to the opinion given by Jpratap, I would like to add and clarify that where the Factory License has been obtained, the factory is exempted from the BOCW Act. The intention of the BOCW Act is to cover the unorganized sector, such as building workers, and provide them with the umbrella of Safety, Health, and Welfare, as rightly stated by Jpratap. Once the Factory Act is applicable on the premises, it will override all other acts related to safety, welfare, and health.
Regards
From India, Vadodara
Acknowledge(0)Amend(0)
Thanks for all the comments and detailed views., However, I do not agree with the view taken by MP HC. Will challenge notice and let you know outcome. Thanks again!
From India, Patiala
Acknowledge(0)Amend(0)
From India, Patiala
Acknowledge(0)Amend(0)
Dear Sir,
(I) What is the cess Act under BCWW Act 1996? Who is supposed to pay the tax, the principal employer or the contractor, if the old tender has been finalized and the tax has not been deducted from the bills? Who is responsible, the contractor or the principal employer, especially when there is no clause for cess in the tender (NIT)?
(II) Does the work of Mechanical earthwork in cutting come under Building & Other constructions, and does it fall under the purview of the cess act?
(III) Does the work for the supply of Ballast fall under the purview of the cess act?
(IV) Does the track work come under the purview of the cess act?
From India, Bhopal
Acknowledge(0)Amend(0)
(I) What is the cess Act under BCWW Act 1996? Who is supposed to pay the tax, the principal employer or the contractor, if the old tender has been finalized and the tax has not been deducted from the bills? Who is responsible, the contractor or the principal employer, especially when there is no clause for cess in the tender (NIT)?
(II) Does the work of Mechanical earthwork in cutting come under Building & Other constructions, and does it fall under the purview of the cess act?
(III) Does the work for the supply of Ballast fall under the purview of the cess act?
(IV) Does the track work come under the purview of the cess act?
From India, Bhopal
Acknowledge(0)Amend(0)
Dear friends,
In the case of Adani Agro vs. State of Haryana (2010 LLR 753), the Punjab and Haryana High Court in Chandigarh has removed all doubts as to who is the 'employer' under the BOCW Act, 1996, and who is required to pay cess under the BOCW Cess Act, 1996. It has also endorsed the views of the MP High Court regarding the applicability of the Act to establishments where the provisions of the Factories Act 1948 apply. For the complete judgment, kindly refer to the Labour Law Reporter or ask me for a photocopy of the same at my email address: jacobpratap@gmail.com.
Regards,
jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
In the case of Adani Agro vs. State of Haryana (2010 LLR 753), the Punjab and Haryana High Court in Chandigarh has removed all doubts as to who is the 'employer' under the BOCW Act, 1996, and who is required to pay cess under the BOCW Cess Act, 1996. It has also endorsed the views of the MP High Court regarding the applicability of the Act to establishments where the provisions of the Factories Act 1948 apply. For the complete judgment, kindly refer to the Labour Law Reporter or ask me for a photocopy of the same at my email address: jacobpratap@gmail.com.
Regards,
jpratap
From India, Chandigarh
Acknowledge(0)Amend(0)
Please refer to rule 3 of the BOCW Cess Rules, 1998 which reads as follows:
"3. Levy of Cess: For the purpose of levy of cess under Sub-sec (1) of Sec. 3 of the Act, the 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 Worker's Compensation Act, 1923."
From India, Chandigarh
Acknowledge(0)Amend(0)
"3. Levy of Cess: For the purpose of levy of cess under Sub-sec (1) of Sec. 3 of the Act, the 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 Worker's Compensation Act, 1923."
From India, Chandigarh
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
4.THE BUILDING AND OTHER CONSTRUCTION WORKERS' WELFARE CESS ACT, 1996.doc
Building-and-ot her-constructio n-workers-act-1 996.pdf