The cess under the relevant welfare legislation is restricted to costs directly attributable to civil construction activities. An assessment order that applies the levy to the aggregate project cost, including non-construction components like land and equipment, is legally unsustainable and requires accurate segregation of expenditures.

ORDER :

Vivek Rusia, J.

1. The petitioner has filed this present petition challenging the order dated 12.3.2021 passed by the Additional Labour Commissioner and Cess Assessment Authority, Indore appointed under the Building and Other Construction Workers Welfare Cess Act, 1996 (hereinafter referred as "BOCW Act").

2. By the impugned order, the learned authority has calculated the cess amount of Rs.3,20,50,540/- on the basis of the project cost of Rs.3,20,50,54,081/-. The petitioner has challenged the aforesaid order by way of writ petition inter-alia on the ground that the cost of land, erection and civil work was Rs.51,46,49,156/- and out of which only Rs.14,98,92,408/- were spent for construction work. The petitioner has deposited the 1% Cess Rs.14,64,755/- with the department.

3. The aforesaid contention has been rejected and vide impugned order dated 12.3.2021 the learned Authority has imposed the cess of Rs.3,05,85,788/-, which is 1% of the total project cost Rs.3,20,50,54,081/-.

4. Similar issue came up for consideration before the Apex Court in the case of Uttar Pradesh Power Transmission Corporation Ltd. and Another Vs. CG Power and Industrial Solutions Limited and Another [judgment dated 12.5.2021 passed in Special Leave Petition (C) No.8630 of 2020], in which the Apex Court has held that the object of enactment of BOCW Act, Cess Act and the Rules is to regulate the employment and conditions of service of building and other construction workers. The extension of the liability on a contractor is with a view to ensure that if for any reason it is not possible to collect the Cess from the owner of the building at a stage subsequent to the completion of the construction, it can be recovered from the contractor. The Apex Court has finally concluded that the 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 and in relation to a building or any other work of construction.

5. Therefore, Shri Maheshwari, learned counsel for the petitioner submits that in view of the aforesaid the impugned order is unsustainable and liable to be set aside.

6. Shri Bhuwan Gautam, learned Government Advocate for the respondents submits that the writ petition is not maintainable. The petitioner has a remedy of appeal before the appellate authority. The appellate authority may consider the judgment passed by the Apex Court while deciding the appeal.

7. We have perused the impugned order and it is apparent that the competent authority has passed the order mechanically calculating the cess @ 1% on the total cost of the project, whereas as per the judgment passed by the Apex Court in the case of Uttar Pradesh Power Transmission Corporation Ltd. (supra), the cess is liable to be paid only in respect of the cost incurred in civil construction work etc.

8. Learned counsel for the petitioner submits that the petitioner has challenged the constitutional validity of the Rule 14(2)(b) & 14(2)(c) of BOCW Cess Rules, 1998.

9. In view of the aforesaid reasons, the impugned order is liable to be quashed and the matter is liable to be remanded back to the competent authority, therefore, at this stage the constitutional validity of the aforesaid rules is not being considered. The opportunity is granted to the petitioner to challenge it, if the occasion so arises in future.

10. Hence, the impugned order dated 12.3.2021 passed by the respondent No.3 is set aside and the matter is