HON'BLE MR. JUSTICE CHANDRA PRAKASH SHRIMALI
Per Dr. Pushpendra Singh Bhati, J:
1. The instant writ petitions have been preferred claiming the
following reliefs:
[2025:RJ-JD:10399-DB] (2 of 7) [CW-11939/2012]
"i. by an appropriate writ, order or direction the
respondents no.1 to 3 may be directed to not deduct the
labour cess at source as per the circular dated 9.7.2010
(Ann.3) to the tender of the petitioner dated 29.6.2009
(Ann.2).
ii. Any other appropriate order which this Hon'ble Court
deems fit just and proper in the facts and circumstances of
the case may kindly be passed in favor of the petitioner.
iii. Cost be allowed to the petitioner."
2. Brief facts of the case are that the petitioner is a Partner of
M/s. Syed Luqman & Sons, Jodhpur, and the said Firm being a
registered 'AA' Class PWD Contractor, was engaged in execution of
the contract works, so awarded to it, relating to Government,
Semi Government & Sub-contractors etc.
3. The bone of contention in the present case is that a Short-
term Tender Information No.03/2009-10 dated 17.06.2009 (in
short, 'Tender in question') was issued by the respondents in
connection with construction of 48 Nos. LSQ Quarters in Police
Line, Daijar, Jodhpur (Block 'B'), as per which, the tender forms
were to be submitted from 29.06.2009 to 03.07.2009. Upon being
successful in the said tender process, the petitioner was awarded
the contract for the said work. But at the time of final payment,
the petitioner was subjected to deduction of Rs.1,99,554/- on
account of Labour Cess under Section 3 of the Building and Other
Construction Workers' Welfare Cess Act, 1996 (hereinafter
referred to as 'Act of 1996') and under Section 7 of the Building
and Other Construction Workers' Welfare Cess Rules, 1998 framed
under the Act of 1996.
4. Learned counsel for the petitioner submitted that such
deduction of Labour Cess, as impugned herein, was stated to have
[2025:RJ-JD:10399-DB] (3 of 7) [CW-11939/2012]
been made in pursuance of the Circular dated 09.07.2010 issued
by the Government of Rajasthan, Labour & Employment
Department. He further submitted that this was despite the fact
that the said Circular dated 09.07.2010 clarified the position
regarding collection of Cess under Section 3 of the Act of 1996
and Registration of Establishment under Section 7 of the Building
and Other Constructions Workers' (Regulation of Employment and
Condition of Service) Act, 1996, by taking the cut off date as
27.07.2009 for the purpose of levy & collection of Cess. He further
submitted that the said Circular, as reflected therein, received
approval of the Finance Department, Government of Rajasthan on
30.06.2010, and admittedly, in the present case, the tender was
accepted and work order was executed on 30.06.2010 i.e. prior to
the said cut off date.
4.1. Learned counsel also submitted that the respondent
authorities, vide Annexure-4 which is dated 14.11.2011, in a
similar case, have arrived at a conclusion that the deduction of the
Labour Cess under the Act of 1996 became applicable for the
tenders, which were received/opened after 30.06.2010, whereas
the tender in the present case, the Tender Forms were opened on
29.06.2009 and the work order was executed prior to 30.06.2010,
and thus, the levy & collection of the Labour Cess was to be
effected accordingly, and not in the manner as done in the present
case by the respondents.
4.2. Learned Counsel further submitted that the impugned action
on the part of the respondents is not sustainable in the eyes of
law, on yet another ground, that the work in question, in
[2025:RJ-JD:10399-DB] (4 of 7) [CW-11939/2012]
pursuance of the Tender Process initiated on 29.06.2009, was to
be completed by June, 2010 and that neither any circular nor any
Act can become part of the contract after signing of the same and
completion of the work thereunder, more particularly, in violation
of the law on the subject i.e. the Indian Contract Act.
5. On the other hand, Mr. Rajesh Panwar, learned Senior
Counsel assisted by Ms. Minal Singhvi, opposed the aforesaid
limited contentions raised on behalf of the petitioner.
5.1. Learned Senior Counsel submitted that the Act of 1996 was
enacted with a view of 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. He further
submitted that the Act of 1996 and the Rules framed thereunder
are to ensure that the Cess is collected at source from the bills of
the contractors to whom payments are made by the owner. In
short, the burden of Cess is passed on from the owner to the
Contractor.
5.2. Learned Senior Counsel also submitted that the Cess became
payable from the date of passing of the Act of 1996; in other
words, the word 'cess' is applicable from the year 1996, when the
said Act was passed; hence, it would be wrong to say that the
Cess became applicable only for the work of Tender
received/opened after 30.06.2010.
5.3. Learned Senior Counsel further submitted that the Circular
dated 09.07.2010 was sufficient in its intention, inasmuch as
thereby "For levy and collection of cess, the date 27 th July 2009,
[2025:RJ-JD:10399-DB] (5 of 7) [CW-11939/2012]
on which the Board has been notified and come into existence,
shall be taken as cut off date". As per learned Senior Counsel, the
deduction in question is to be made as per the date fixed by the
Government for the said purpose and that as per the contract, the
stipulated date of completion of the work was 30.06.2010, and
thus, the contention of the petitioner that the action of the
respondents in levying & collecting the Labour Cess in question
suffers from legal infirmity, is not worthy of any acceptance, in the
given facts and circumstances.
5.4. As against the argument advanced on behalf of the petitioner
on the basis of Annexure-4, which is dated 14.11.2011, learned
Senior Counsel submitted that as is apparent on the face of it, the
same was merely a letter addressed by the Financial Adviser,
PWD, Jaipur to the Superintending Engineer, PWD, NH Circle,
Jodhpur, and that the Financial Adviser was not empowered to
change the date applicable for levy & collection of the Cess in
question.
6. Heard learned counsel for the parties as well as perused the
record of the case.
7. This Court, after examining the limited issue submitted by
learned counsel for the parties, finds that the petitioner who is a
'AA' Class PWD Contractor, engaged in execution of contract
works, pertaining to Government, Semi Government & Sub-
Contractors, has completed the work for the respondents in
pursuance of the Tender in question dated 17.06.2009 (with date
of opening of Tender Forms, alongwith requisite fee, as
29.06.2009 & closing of Tender forms as 03.07.2009; date of
[2025:RJ-JD:10399-DB] (6 of 7) [CW-11939/2012]
opening of Tender as 08.07.2009; work completion period as 11
months).
8. The limited question raised for adjudication by both the
parties, is that the levy & collection of the Labour Cess for a
Tender process initiated on 29.06.2009 would be applicable in the
present case from the date of Circular i.e.09.07.2010, or the date
prescribed in such Circular, which is 27.07.2009, or the date
mentioned in Annexure-4 dated 14.11.2011, which is one of the
orders which reflects that the deduction of the Labour Cess under
the Act of 1996 and the Rules framed thereunder for the Tenders
received/opened after 30.06.2010 or from the date of coming into
force of the Act of 1996.
9. This Court observes that the Government of Rajasthan
approved the Cess in question in accordance with Section 3 of the
Act of 1996 and Registration of Establishment under Section 7 of
the Building and Other Construction Workers' (Regulation of
Employment and Conditions of Service) Act, 1996.
10. At this juncture, this Court considers it appropriate to
reproduce the relevant part of the circular dated 09.07.2010, as
hereunder:
"It is therefore, directed that cess may be deducted on
all such running projects in the State of Rajasthan under
your jurisdiction and the same may be deposited in Budget
Head 0230-Labour & Employment-800-Other Receipts-(06)
cess for welfare of building and other constructions workers
(welfare cess) through challan under intimation to the Cess
Collector and Assessing Officer of respective jurisdiction. For
levy and collection of cess, the date 27 th July 2009, on which
date the Board has been notified and come into existence,
shall be taken as cut off date."
[2025:RJ-JD:10399-DB] (7 of 7) [CW-11939/2012]
10.1. Relevant portion of the Annexure-4 dated 14.11.2011 is also
reproduced as hereunder:
"In this connection deduction of Labour Cess under the
above Act became applicable for the work of tenders
received/opened after 30-06-2010"
11. This Court considers it appropriate to go with the Circular
dated 09.07.2010. As per the factual matrix of the present case,
the Tender Process was initiated on 29.06.2009, while as per the
Circular dated 09.07.2010, for levy & collection of Cess, the date
i.e. 27.07.2009, on which the Board has been notified and came
into existence, was to be taken as the cut off date, and therefore,
there cannot be a retrospective applicability of the Cess in
question and the said Circular will have to be strictly followed.
Thus, going strictly by the Circular, no retrospective application of
the Cess in question, for the Tender process initiated on
29.06.2009, other than the date (27.07.2009) stipulated in the
Circular, can be provided.
12. In view of the above, the present writ petitions are allowed,
and accordingly, the impugned deduction of the Labour Cess,
arising out of the Tender process in question initiated on
29.06.2009 and worked upon by the petitioner, is quashed and set
aside. All pending applications stand disposed of.
(CHANDRA PRAKASH SHRIMALI),J (DR.PUSHPENDRA SINGH BHATI),J
SKant/-
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