The Jharkhand High Court dismissed a petition seeking a refund of the labor cess deducted against the bill for the supply of material and consultancy charges and held that from the conjoint reading of both Section 2(d) and Section 3 of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service), it can be stated that no cess can be levied on supply or consultancy component and can only be levied on construction, alteration, repair, maintenance or demolition work.
Brief Facts:
The state filed the present petition against the order passed by the trial court whereby the petition filed was disposed of holding that the Labour Cess is not leviable on the supply of materials and consultancy charges with respect to the contract, which is distinct from the contracts of civil works and the state further was directed to refund the Labour Cess deducted against the writ petitioner’s bill for supply of material and consultancy charges
Contentions of the Applicant:
The learned counsel appearing on behalf of the petitioner contended that the court could not have entertained the writ petition filed under Article 226 of the Constitution of India, in view of the alternative remedy available under Section 11 of the Building and Other Construction Workers Welfare Cess Act, 1996 read with Section 14 of the Building and Other Construction Workers Welfare Cess Rules, 1998. It was further argued that Labour Cess has to be deducted from the cost of the entire project, which includes the cost of supply, consultancy charges, engineering and, and thus, the appellant committed no illegality in deducting the amount of Cess from the bills of the respondent.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondents contended that as per the Building and Other Construction Workers Welfare Cess Act, 1996, the Cess can only be levied on the component of construction and erection and not on the supply of materials and consultancy. It was further argued that the applicant had committed grave illegality by deducting cess on the component of supply of materials and consultancy etc. over and above the erection and construction part.
Observations of the Court:
The court stated that it was clear as per Section 3(1) of the Building & Other Construction Workers’ Welfare Cess Act, 1996 that cess would be levied and collected at a particular per cent of the cost of construction incurred by the employer. The court further referred to the definition of “building or other construction work” in Section 2(d) of the act and stated that the “building or other construction” will mean and convene to any construction, alteration, repairs, maintenance or demolition of or in relation to the said structures. The court observed that from the conjoint reading of both Section 2(d) and Section 3 of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service), it can be stated that no cess can be levied on supply or consultancy component and can only be levied on construction, alteration, repair, maintenance or demolition work.
On the plea for alternative remedy, the court referred to the judgment in Uttar Pradesh Power Transmission Corporation Ltd. vs. CG Power and Industrial Solutions Limited which held that relief under Article 226 of the Constitution of India may be granted in a case arising from civil contract. It was further stated that the availability of alternative remedies does not prohibit the High Court from maintaining a writ petition in an appropriate case.
The decision of the Court:
The court dismissed the petition and upheld the impugned order.
Case Title: State of Jharkhand and ors. vs. M/s Flowmore Limited and ors.
Coram: Hon’ble Mr. Chief Justice Sanjaya Kumar Mishra and Hon’ble Mr. Justice Ananda Sen
Case No.: L.P.A. No.511 of 2022
Advocate for the Applicant: Mr. Manoj Tandon and Ms. Neha Bhardwaj
Advocate for the Respondent: Mr. M.S Mittal, Mr. Salona Mittal and Mr. Mrinal Kanti Roy
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