Andhra Pradesh High Court - Amravati
M/S. Hindustan Ratnajv vs The Secretary To Govt, And 5 Others on 15 November, 2022
HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA
WRIT PETITION No. 28279 of 2014
ORDER:
This writ petition under Article 226 of the Constitution of India is
filed for the following relief:-
"to issue a Writ Order or direction and more particularly
one in the nature of Writ of Mandamus declaring the
action of the respondents in not refunding the amount
deducted from the petitioner as Labour Cess @ 1% in
respect of the work allotted to the petitioner vide
Agreement No.06 SE/200708 dated 19.07.2007 in relating
to the work of Additional Investigation Design
Preparation of Estimates and Earth work excavation for
widening of GNSS flood flow canal II from Owk Reservoir
to Gandikota Reservoir from Km 15.874 / 16.500 to
32.520 / 34.800 (length 16.02 Km) including construction
of all CM & CD works en-route the canal for a carrying
capacity of 20,000 cusecs in Kurnool and Kadapa
Districts as illegal arbitrary and unconstitutional and
consequently direct the respondents to refund the amount
which were already deducted from the petitioner company
as labour cess @ 1% to the petitioner relating to the
Agreement No 06 SE/200708 dated 19.07.2007 and pass
such other order or orders as this Honble Court may deem
fit and proper in the circumstances of the case"
2. Heard learned counsel for the petitioner and learned Government
Pleader for Irrigation & CAD appearing for the respondents.
3. Learned counsel for the petitioner would submit that the issue
involved in this writ petition is squarely covered by the order of the
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erstwhile High Court of Andhra Pradesh at Hyderabad dated 22.10.2009
passed in W.P.No.11269 of 2009 and batch and hence, the present writ
petition may also be disposed of in terms thereof. The same is not
disputed by the learned Government Pleader for Irrigation & CAD
appearing for the respondents. But, the learned Government Pleader
would contend that the petitioner is not entitled to refund of the amount
already deducted. The relevant portion of the above mentioned order
reads as follows:
"1996 Act and Cess Act were enacted with the avowed policy
and the object of protecting the interests of workers engaged in the
building activity. These enactments apply to the persons or
institutions, which engage not less than 10 workers in construction
or building work in the preceding twelve months. The manner in
which the cess is to be administered is provided for under the Act.
The Cess Act enables the competent authority to recover or collect
cess at the prescribed rate which shall be between 1% and 2%. It is
stated that the notification that was issued in this regard stipulates
the cess at 1%.
The burden in the form of cess must be borne by the agency
that undertakes the construction. It is not an obligation that can be
placed upon the contractors. The incidence of this levy cannot be
compared with the service charges or profession tax which are
squarely referable to the activity undertaken by the person or
agency not the one for or on behalf of whom the activity is
undertaken. Obviously to ensure proper enforcement of the
provisions of the enactments, the state Government issued
directions from time to time to the departments concerned to add
an amount of 1% to the estimates. In U.O.Note dated 28.02.2008,
the finance department tendered the following advice:
(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.
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W.P.No.28279 of 2014
(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.
Independent of the said note, the departments of the
Government are expected to recognize their obligation under 1996
Act. Assuming that there existed any justification for their omission
to include the amount payable towards cess in the estimates, they
cannot be permitted to deduct that amount while making payments
to the contractors. In a way, it would amount to either penalizing
the contractor or affecting the levy contrary to the provisions of
1996 Act. The consequences that flow from any violation of 1996
Act must in fact be directed towards agency that has undertaken
construction. Therefore, the inescapable conclusion is that the
occasion for an agency to deduct the cess under the Cess Act would
arise only when the corresponding amount is included in the
estimates. Conversely, if the amount representing the cess, is not
included in the estimates, deductions cannot be made while making
payments to the contractors.
Therefore, 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."
4. Adopting the reasoning mentioned in the aforesaid order dated
22.10.2009 in W.P.No.11269 of 2009 and batch, a learned Single Judge
of the erstwhile High Court of Andhra Pradesh at Hyderabad dealt with
the refund of amount already deducted from the bills at para 4 of the
order dated 11.04.2012 in W.P.No.11269 of 2009, as follows:
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"4. ......... ........ ...... The learned Government Pleader
would, however, seek to draw a distinction by contending that the
above cases related to recovery of the amount by way of cess but
not refund of the amount already collected. Whether it is a case of
proposed deduction from the bills or the case of refund of the
amounts already deducted, the ratio laid down in the above
judgment applies equally. When once it is held that the
respondents have no right to recover any amount from the
contractors towards cess without first including the same in the
estimates and such deduction towards cess from the bill amounts
without there being any corresponding inclusion of the said amount
in the estimates is bad in law, the petitioner would certainly be
entitled for refund of the said amount which is already deducted
from the bills. The inaction on the part of the respondents in not
refunding the amount already collected towards labour cess is,
therefore, held unsustainable and the petitioner is certainly entitled
for the relief prayed for, in view of the earlier judgments of this
Court in the above batch of writ petitions."
5. In view of the above, this Court is of the opinion that the present
case is squarely covered by the above orders of this Court and the
petitioner is entitled for refund of the amount which was already
deducted from the bills.
6. Accordingly, the Writ Petition is disposed of in terms of the
aforesaid order dated 22.10.2009 passed in W.P.No.11269 of 2009 and
batch. There shall be no order as to costs.
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Consequently, Miscellaneous Petitions, if any, pending in the
writ petition shall stand closed.
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VENKATESWARLU NIMMAGADDA, J
15th November, 2022
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W.P.No.28279 of 2014
HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA
Writ Petition No.28279 of 2014
15th November, 2022
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