Uttar Pradesh Power Transmission Corporation Ltd. Vs CG Power And Industrial Solutions Limited (Supreme Court of India)
Conclusion: UPPTCL had no power and authority and or jurisdiction to realize labour cess under the Cess Act in respect of the first contract by withholding dues in respect of other contracts and/or invoking a performance guarantee. The finding of the High Court was sustainable as UPPTCL acted in excess of power by its acts impugned, when there was admittedly no assessment or levy of cess under the Cess Act.
Held: SLP under Article 136 of the Constitution of India, filed by assessee-UPPTCL, as against a final order passed by High Court, allowing the writ petition filed by Respondent No.1 and directing the Respondent No.1 to remit Labour Cess amounting to Rs.2,60,68,814/-, computed at 1% of the contract value, under Sections 3 sub-section (1) and (2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996 (“Cess Act”), read with Rules 3 and Rule 4 (1), (2) (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998, (“Cess Rules”) and also section 2 (1)(d), (g) and (i) of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996, hereinafter referred to as the “BOCW Act”. . The Statement of Objects and Reasons revealed that the necessity to enact BOCW Act arose from the necessity to levy cess on the cost of construction incurred by the employers on a building and on other construction works, in order to generate funds for the Welfare Boards to enable such Welfare Boards to undertake social security schemes and welfare measures for building and construction workers. It was held that the action of UPPTCL in forcibly extracting building cess from the Respondent in respect of the first contract, solely on the basis of the CAG report, was in excess of power conferred on UPPTCL by law or in terms of the contract. In other words, UPPTCL had no power and authority and or jurisdiction to realize labour cess under the Cess Act in respect of the first contract by withholding dues in respect of other contracts and/or invoking a performance guarantee. There was no legal infirmity in the finding of the High Court that UPPTCL acted in excess of power by its acts impugned, when there was admittedly no assessment or levy of cess under the Cess Act. Even otherwise, the Cess Act and/or statutory rules framed thereunder prescribe the mode and manner of recovery of outstanding cess under the Cess Act. It was well settled that when statute required a thing to be done in a particular manner, it was to be done in that manner alone. UPPTCL could not have taken recourse to the methods adopted by it. The impugned communications had rightly been set aside. The judgment and order of the High Court impugned did not call for inference under Article 136 of the Constitution of India.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. This Special Leave Petition, under Article 136 of the Constitution of India, filed by the Petitioner, hereinafter referred to as the UPPTCL, is against a final Judgment and Order dated 24th February 2020 passed by the High Court of Judicature at Allahabad (Lucknow Bench), allowing the writ petition filed by Respondent No.1 and setting aside the letters dated 2nd September 2016 and 29th December 2018 issued by the Executive Engineer, Unnao UPPTCL directing the Respondent No.1 to remit Labour Cess amounting to Rs.2,60,68,814/-, computed at 1% of the contract value, under Sections 3 sub-section (1) and (2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, hereinafter referred to as the “Cess Act”, read with Rules 3 and Rule 4 (1), (2) (3) and (4) of the Building and Other Construction Workers Welfare Cess Rules, 1998, hereinafter referred to as the “Cess Rules” and also Section 2 (1)(d), (g) and (i) of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996, hereinafter referred to as the “BOCW Act”.
2. The BOCW Act has been enacted to regulate the employment and conditions of service of building and other construction workers and to provide for their safety, health and welfare measures and for other matters connected therewith or incidental thereto. As per the Statement of Objects and Reasons for the BOCW Act, “it is estimated that about 8.5 million workers in the country are engaged in building and other construction works. Building and other construction workers are one of the most numerous and vulnerable segments of the unorganised labour in India. The building and other construction works are characterised by their inherent risk to the life and limb of the workers. The work is also characterised by its casual nature, temporary relationship between employer and employee, uncertain working hours, lack of basic amenities and inadequacy of welfare facilities.”
3. The Statement of Objects and Reasons further state “in view of the circumstances explained above, it has been considered necessary to constitute Welfare Boards in every State so as to provide and monitor social security schemes and welfare measures for the benefit of building and other construction workers. For the said purpose, it has been considered appropriate to bring in a comprehensive legislation by suitably amplifying the provisions of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Bill, 1988 which was introduced in the Rajya Sabha on the 5th December, 1988. It has also been considered necessary to levy a cess on the cost of construction incurred by the employers on the building and other construction works for ensuring sufficient funds for the Welfare Boards to undertake the social security schemes and welfare measures.”
4. As stated in its Statement of Objects and Reasons, the BOCW Act, iner alia, provides for the following matters:-
“i) provision to cover every establishment which employs or had employed on any day of the preceding twelve months, fifty or more workers in any building or other construction work;
……….
(v) registration of establishments employing construction workers,
(vi) registration of building workers as beneficiaries under the said Ordinance and provision for their identity cards, etc.;
(vii) constitution of Welfare Boards by the State Governments and registration of beneficiaries under the Fund;
(viii) provide for financing and augmenting resources of the Welfare Board constituted by the State Governments;
(ix) fixing hours for normal working day, weekly paid rest day, wages for over time, provision of basic welfare: amenities like drinking water, latrines and urinals, creches, first aid, canteens, etc., for the building workers;
(x) provision for temporary living accommodation to all building workers within or near the work site;
(xi) making adequate provisions for safety and health measures for construction workers including appointment of safety committees and safety officers and compulsory notification of accidents.”
5. The Statement of Objects and Reasons reveals that the necessity to enact BOCW Act arose from the necessity to levy cess on the cost of construction incurred by the employers on a building and on other construction works, in order to generate funds for the Welfare Boards to enable such Welfare Boards to undertake social security schemes and welfare measures for building and construction workers.
6. Section 2(1)(d) of the BOCW Act defines “building or other construction work” to mean the construction, alteration, repairs, maintenance or demolition of or, in relation to, buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission and distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio; television, telephone, telegraph and overseas communication dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aquaducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the appropriate Government, by notification, but does not include any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), apply.
7. Under Section 2(1)(e) of the BOCW Act ‘building worker’ means a person who is employed to do any skilled, semiskilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, in connection with any building or other construction work but does not include any such person-
(i) who is employed mainly in a managerial or administrative capacity; or.
(ii) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
8. Clause (b) of Section 2(1) of the BOCW Act defines ‘beneficiary’ to mean building workers, registered under Section 12 of the said Act. ‘Contractor’, ‘employer’ and ‘establishment’ respectively have been defined in Sections 2(1)(g), 2(1)(i) and 2(1)(j) of the BOCW Act set out hereinbelow:-
“(g) “contractor” means a person who undertakes to produce a given result for any establishment, other than a mere supply of goods or articles of manufacture, by the employment of building workers or who supplies building workers for any work of the establishment; and includes a sub-contractor;
……….
(i) employer”, in relation to an establishment, means the owner thereof, and includes,-
(i) in relation to a building or other construction work carried on by or under the authority of any department of the Government, directly without any contractor, the authority specified in this behalf, or where no authority is specified, the head of the department;
(ii) in relation to a building or other construction work carried on by or on behalf of a local authority or other establishment, directly without any contractor, the chief executive officer of that authority or establishment;
(iii) in relation to a building or other construction work carried on by or though a contractor, or by the employment of building workers supplied by a contractor, the contractor;
(j) establishment means any establishment belonging to, or under the control of, Government, any body corporate or firm, an individual or association or other body of individuals which or who employs building workers in any building or other construction work; and includes an establishment belonging to a contractor, but does not include an individual who employs such workers in any building or construction work in relation to his own residence the total cost of such construction not being more than rupees ten lakhs”
9. Some of the relevant provisions of the BOCW Act are set out hereunder:-
“7. Registration of establishments.- (1) Every employer shall,-
(a in relation to an establishment to which this Act applies on its commencement, within a period of sixty days from such commencement; and
(b) in relation to any other establishment to which this Act may be applicable at any time after such commencement, within a period of sixty days from the date on which this Act becomes applicable to such establishment, make an application to the registering officer for the registration of such establishment:
Provided that the registering officer may entertain any such application after the expiry of the periods aforesaid, if he is satisfied that the applicant was prevented by sufficient cause from making the application within such period.
8. Revocation of registration in certain cases.– If the registering officer is satisfied, either on a reference made to him in this behalf or otherwise, that the registration of any establishment has been obtained by misrepresentation or suppression of any material fact or that the provisions of this Act are not being complied with in relation to any work carried on by such establishment, or that for any other reason the registration has become useless or ineffective and, therefore, requires to be revoked, he may, after giving an opportunity to the employer of the establishment to be heard, revoke the registration.
9. Appeal.- (1) Any person aggrieved by an order made under Section 8 may, within thirty days from the date on which the order is communicated to him, prefer an appeal to the appellate officer who shall be a person nominated in this behalf by the appropriate Government:
Provided that the appellate officer may entertain the appeal after the expiry of the said period of thirty days if he is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.
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11. Beneficiaries of the Fund.- Subject to the provisions of this Act, every building worker registered as a beneficiary under this Act shall be entitled to the benefits provided by the Board from its Fund under this Act.
12. Registration of building workers as beneficiaries.- (1) Every building worker who has completed eighteen years of age, but has not completed sixty years of age, and who has been engaged in any building or other construction work for not less than ninety days during the preceding twelve months shall be eligible for registration as a beneficiary under this Act.
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16. Contribution of building workers.- (1) A building worker who has been registered as a beneficiary under this Act shall, until he attains the age of sixty years, contribute to the Fund at such rate per mensem, as may be specified by the State Government, by notification in the Official Gazette and different rates of contribution may be specified for different classes of building workers:
Provided that the Board may, if satisfied that a beneficiary is unable to pay his contribution due to any financial hardship, waive the payment of contribution for a period not exceeding three months at a time.
(2) A beneficiary may authorise his employer to deduct his contribution from his monthly wages and to remit the same, within fifteen days front such deduction, to the Board.
17. Effect of non-payment of contribution.– When a beneficiary has not paid his contribution under sub-section (1) of section 16 for a continuous period of not less than one year, he shall cease to be a beneficiary:
Provided that if the Secretary of the Board is satisfied that the non-payment of contribution was for a reasonable ground and that the building worker is willing to deposit the arrears, he may allow the building worker to deposit the contribution in arrears and on such deposit being made, the registration of building worker shall stand restored.
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22. Functions of the Boards.—(1) The Board may—
(a) provide immediate assistance to a beneficiary in case of accident;
(b) make payment of pension to the beneficiaries who have completed the age of sixty years;
(c) sanction loans and advances to a beneficiary for construction of a house not exceeding such amount and on such terms and conditions as may be prescribed;
(d) pay such amount in connection with premia for Group Insurance Scheme of the beneficiaries as it may deem fit;
(e) give such financial assistance for the education of children of the beneficiaries as may be prescribed;
(f) meet such medical expenses for treatment of major ailments of a beneficiary or, such dependant, as may be prescribed;
(g) make payment of maternity benefit to the female beneficiaries; and
(h) make provision and improvement of such other welfare measures and facilities as may be prescribed.
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24. Building and Other Construction Workers’ Welfare Fund and its application.- (1) There shall be constituted by a Board a fund to be called the Building and other Construction Workers’ Welfare Fund and there shall be credited thereto-
(a) any grants and loans made to the Board by the Central Government under section 23;3
(b) all contributions made by the beneficiaries;
(c) all sums received by the Board from such other sources as may be decided by the Central Government,
(2) The Fund shall be applied for meeting-
(a) expenses of the Board in the discharge of its functions under section 22; and
(b) salaries, allowances and other remuneration of the members, officers and other employees for the Board;
(c) expenses on objects and for purposes authorised by this Act.
(3) No Board shall, in any financial year, incur expenses towards salaries, allowances and other remuneration to its members, officers and other employees and for meeting the other administrative expenses exceeding five percent of its total expenses during that financial year.
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32. Drinking water.-(1) The employer shall make in every place where building or other construction work is in progress, effective arrangements to provide and maintain at suitable points conveniently situated for all persons employed there in, a sufficient supply of wholesome drinking water.
(2) All Such points shall be legible marked Drinking Water in a language understood by a majority of the person employed in such place and no such point shall be situated within six metres of any washing place, Urinal or latrine.
33. Latrines and urinals.- In every place where building or other construction work is carried on, the employer shall provide sufficient latrine and urinal accommodation of such types as may be prescribed and they shall be so conveniently situated as may be accessible to the building workers at all times while they are in such place:
Provided that it shall not be necessary to provide separate urinals in my place where less than fifty persons are employed or where the latrines are connected to a water-borne sewage system.
34. Accommodation.- (1) The employer shall provide, free of charges and within the work site or as near to it as may be possible temporary living accommodation to all building workers employed by him for such period as the building or other construction work is in progress.
(2) The temporary accommodation provided under sub-section (1) shall have separate cooking place bathing, washing and lavatory facilities
35. Creches.- (1) In every place where in more them fifty female building workers are ordinarily employed, there shall be provided and maintained, a suitable room or rooms for the use of children under the, age of six years of such female workers.
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36. First-aid.—Every employer shall provide in all the places where building or other construction work is carried on such first-aid facilities as may be prescribed.
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38. Safety Committee and safety officers.—(1) In every establishment wherein five hundred or more building workers are ordinarily employed, the employer shall constitute a Safety Committee consisting of such number of representatives of the employer and the building workers as may be prescribed by the State Government.
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40. Power of appropriate Government to make rules for the safety and health of building workers.—(1) The appropriate Government may, by notification, make rules regarding the measures to be taken for the safety and health of building workers in the course of their employment and the 14 equipment and appliances necessary to be provided to them for ensuring their safety, health and protection, during such employment.
(2) In particular, and without prejudice to the generality of the foregoing 9 power, such rules may provide for all or any of the following matters, namely: —
41. Framing of model rules for safety measures.-The Central Government may, after considering the recommendation of the expert committee constituted under section n5, fran1e model rules in respect of all or any of the matters specified in section 40 and where any such model rules have been framed in respect of (my such matter, the appropriate Government shall while making any rules in respect of that matter under section 40, so far as is practicable, conform to such model rules.
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46. Notice of commencement of building or other construction work.
—(1) An employer shall, at least thirty days before the commencement of any building or other construction work, send or cause to be sent to the Inspector having jurisdiction in the area where the proposed building or other construction work is to be executed, a written notice containing—
(a) the name and situation of the place where the building or other construction work is proposed to be carried on;
(b) the name and address of the person who is undertaking the building or other construction work;
(c) the address to which communications relating to the building or other construction work may be sent;
(d) the nature of the work involved and the facilities, including any plant and machinery, provided;
(e) the arrangements for the storage of explosives, if any, to be used in the building or other construction work;
(f) the number of workers likely to be employed during the various stages of building or other construction work;
(g) the name and designation of the person who will be in overall charge of the building or other construction work at the site;
(h) the approximate duration of the work;
(i) such other matters as may be prescribed.
(2) Where any change occurs in any of the particulars furnished under subsection (1), the employer shall intimate the change to the Inspector within two days of such change.
(3) Nothing contained in sub-section (1) shall apply in case of such class of building or other construction work as the appropriate Government may by notification specify to be emergent works.”
10. A perusal of the various provisions of the BOCW Act makes it amply clear that the said Act has been enacted for the welfare of only building and other construction workers and to make adequate provisions for their safety, health and financial security.
11. The Cess Act has been enacted to provide for the levy and collection of cess on the cost of construction incurred by employers, with a view to augment the resources of the Building and Other Construction Workers’ Welfare Boards, constituted under the BOCW Act.
12. Section 3(1) of the Cess Act, which is the charging section, provides for the levy and collection of a Cess for the purposes of the BOCW Act, at such rate not exceeding two per cent, but not less than one per cent, of the cost of construction incurred by an employer, as the Central Government may, by notification in the Official Gazette, from time to time specify.
13. Sub-Section (2) of Section 3 of the Cess Act provides that the Cess levied under Sub-Section (1) shall be collected from every employer in such manner and at such time, including deduction at source, in relation to a building or other construction work of a Government or of a Public Sector Undertaking, or advance collection through a local authority, where an approval of such building or other construction work by such local authority is required, as may be prescribed by rules made under the BOCW Act.
14. Sub-Section (3) of Section 3 provides that the proceeds of the Cess collected under Sub-Section (2) shall be paid, by the local authority or the State Government collecting the Cess, to the Board after deducting the cost of collection of such cess not exceeding one per cent of the amount collected.
15. Sub-Section (4) of Section 3 of the Cess Act, contains a non obstante clause which makes it clear that, notwithstanding anything contained in Sub-Section (1) or (2), the Cess leviable under the Cess Act, including payment of such Cess in advance may, subject to final assessment to be made, be collected at a uniform rate or rates, as may be prescribed by the Cess Rules, on the basis of the quantum of the building or other construction work involved.
16. Section 4(1) requires every employer to furnish such return to such officer or authority, in such manner and at such time as may be prescribed. Sub-Section (2) of Section 4 provides that, if any person carrying on the building or other construction work, liable to pay the Cess under Section 3, fails to furnish any return under Sub-Section (1), the officer or the authority shall give a notice requiring such person to furnish such return before such date as may be specified in the notice.
17. Sections 5, 6, 7, 8, 9 and 10 of the Cess Act provide:-
“5. Assessment of cess.—(1) The officer or authority to whom or to which the return has been furnished under Section 4 shall, after making or causing to be made such inquiry as he or it thinks fit and after satisfying himself or itself that the particulars stated in the return are correct, by order, assess the amount of cess payable by the employer.
(2) If the return has not been furnished to the officer or authority under sub-section (2) of Section 4, he or it shall, after making or causing to be made such inquiry as he or it thinks fit, by order, assess the amount of cess payable by the employer.
(3) An order of assessment made under sub-section (1) or sub-section (2) shall specify the date within which the cess shall be paid by the employer.
6. Power to exempt.—Notwithstanding anything contained in this Act, the Central Government may, by notification in the Official Gazette, exempt any employer or class of employers in a State from the payment of cess payable under this Act where such cess is already levied and payable under any corresponding law in force in that State.
7. Power of Entry – Any officer or authority of the State Government specially empowered in this behalf by that Government may–
(a) with such assistance, if any, as he or it may think fit, enter at any reasonable time any place where he or it considers it necessary to enter for carrying out the purposes of this Act including verification of the correctness of any particulars furnished by any employer under section 4;
(b do within such place anything necessary for the proper discharge of his or its duties under this Act; and
(c) exercise such other powers as may be prescribed.
8. Interest payable on delay in payment of cess. – If any employer fails to pay any amount of cess payable under section 3 within the time specified in the order of assessment, such employer shall be liable to pay interest on the amount to be paid at the rate of two per cent. for every month or part of a month comprised in the period from the date on which such payment is due till such amount is actually paid.
9. Penalty for non-payment of cess within the specified time.—If any amount of cess payable by any employer under Section 3 is not paid within the date specified in the order of assessment made under Section 5, it shall be deemed to be in arrears and the authority prescribed in this behalf may, after making such inquiry as it deems fit, impose on such employer a penalty not exceeding the amount of cess:
Provided that, before imposing any such penalty, such employer shall be given a reasonable opportunity of being heard and if after such hearing the said authority is satisfied that the default was for any good and sufficient reason, no penalty shall be imposed under this section.
10. Recovery of amount due under the Act.—Any amount due under this Act (including any interest or penalty) from an employer may be recovered in the same manner as an arrear of land revenue.”
18. In exercise of power conferred by Section 14 of the Cess Act, the Central Government has by Notification GSR 149(E) dated 26th March 1998 published in the Gazette of India, Extra; part 2, Section 3(1), dated 26th March 1998, enacted the Building and Other Construction Workers’ Welfare Cess Rules, 1998. Rules 3, 4, 5, 6, 7, 8, 9, 12, 13 and 14 of the Cess Rules, provide:
“3. Levy of cess.—For the purpose of levy of cess under sub-section (1) of Section 3 of the Act, 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 Workmen’s Compensation Act, 1923.
4. Time and manner of collection.—(1) The cess levied under subsection (1) of Section 3 of the Act shall be paid by an employer, within thirty days of completion of the construction project or within thirty days of the date on which assessment of cess payable is finalised, whichever is earlier, to the Cess Collector.
(2) Notwithstanding the provisions of sub-rule (1), where the duration of the project or construction work exceeds one year, cess shall be paid within thirty days of completion of one year from the date of commencement of work and every year thereafter at the notified rates on the cost of construction incurred during the relevant period.
(3) Notwithstanding the provisions of sub-rule (1) and sub-rule (2), where the levy of cess pertains to building and other construction work of a Government or of a Public Sector Undertaking, such Government or the Public Sector Undertaking shall deduct or cause to be deducted the cess payable at the notified rates from the bills paid for such works.
(4) Notwithstanding the provisions of sub-rule (1) and sub-rule (2), where the approval of a construction work by a local authority is required, every application for such approval shall be accompanied by a crossed demand draft in favour of the Board and payable at the station at which the Board is located for an amount of cess payable at the notified rates on the estimated cost of construction:
Provided that if the duration of the project is likely to exceed one year, the demand draft may be for the amount of cess payable on cost of construction estimated to be incurred during one year from the date of commencement and further payments of cess due shall be made as per the provisions of sub-rule (2).
(5) An employer may pay in advance an amount of cess calculated on the basis of the estimated cost of construction along with the notice of commencement of work under Section 46 of the Main Act by a crossed demand draft in favour of the Board and payable at the station at which the Board is located:
Provided that if the duration of the project is likely to exceed one year, the demand draft may be for the amount of cess payable on cost of construction estimated to be incurred during one year from the date of such commencement and further payment of cess due shall be made as per the provisions of sub-rules (2).
(6) Advance cess paid under sub-rules (3), (4) and (5), shall be adjusted in the final assessment made by the Assessing Officer.
5. Transfer of the proceeds of the cess to the Board.—(1) The proceeds of the cess collected under Rule 4 shall be transferred by such Government office, Public Sector Undertakings, local authority, or Cess Collector, to the Board along with the form of challan prescribed (and in the head of account of the Board) under the accounting procedures of the State, by whatever name they are known.
(2) Such government office or Public Sector Undertakings may deduct from the cess collected, or claim from the Board, as the case may be, actual collection expenses not exceeding one per cent of the total amount collected.
(3) The amount collected shall be transferred to the Board within thirty days of its collection.
6. Information to be furnished by the employer.—(1) Every employer, within thirty days of commencement of his work of payment of cess, as the case may be, furnish to the Assessing Officer, information in Form I.
(2) Any change or modification in the information furnished under sub-rule (1) shall be communicated to the Assessing Officer immediately but not later than thirty days from the date of affecting the modification or change.
7. Assessment.—(1) The Assessing Officer, on receipt of information in Form I from an employer shall make a scrutiny of such information furnished and, if he is satisfied about the correctness of the particulars so furnished, he shall make an order of assessment within a period not exceeding six months from the date of receipt of such information in Form I, indicating the amount of cess payable by the employer and endorse a copy thereof to the employer, to the Board and to the Cess Collector and despatch such order within five days of the date on which such order is made.
(2) The order shall inter alia, specify the amount of cess due, cess already paid by the employer or deducted at source and the balance amount payable and the date, consistent with the provision of Rule 4, by which the cess shall be paid to the Cess Collector.
(3) If on scrutiny of information furnished, the Assessing Officer is of the opinion that employer has undercalculated or miscalculated the cost of construction or has calculated less amount of cess payable, he shall issue notice to the employer for assessment of the cess.
(4) On receipt of such notice the employer shall furnish to the Assessing Officer a reply together with copies of documentary or other evidence in support of his claim, within fifteen days of the receipt of the notice:
Provided that the Assessing Officer may, in the course of assessment, afford an opportunity to the assessee to be heard in person, if he so requests to substantiate his claim.
(5) If the employer fails to furnish the reply within the period specified under sub-rule (4), or where an employer fails to furnish information in Form I, the Assessing Officer shall proceed to make the assessment on the basis of available records, and other information incidental thereto.
(6) The Assessing Officer may, at any time while the work is in progress, authorise such officer to make such enquiry at the work site or from documentary evidence or in any other manner as he may think fit for the purpose of estimating the cost of construction as accurately as possible.
8. Return of overpaid cess.—(1) Where the Assessing Officer has passed an order of assessment and the employer decides to withdraw from or foreclose the works or modifies the plan of construction thereby reducing the cost of construction undertaken or has been forced by other circumstances to call off the completion of the work undertaken, he may seek revision of the assessment order by making an information in Form II to the Assessing Officer giving details of such reduction or stoppage of work.
(2) Revision of order of assessment shall be made by the Assessing Officer, in the same manner as the original order, within thirty days of receipt of such information in Form II.
(3) Following the revision of assessment as per sub-rule (2), the Assessing Officer shall, wherever necessary, endorse a copy of the revised assessment to the Board or Cess Collector, as the case may be, for making the refund of excess cess as ordered in the revised assessment.
(4) The Board shall, within thirty days of recepit of the endorsement from the Assessing Officer under sub-rule (3), refund the amount specified in the order to the employer through a demand draft payable at the station where the establishment is located.
(5) Where the Appellate Authority has modified the order of assessment reducing the amount of cess, refund shall be made within such time as may be specified in that order.
9. Exemption.—(1) Any employer or class of employers in a State seeking exemption under Section 6 of the Act may make an application to the Director-General of Labour Welfare, Ministry of Labour, Government of India, stating the details of works undertaken, names of the Act or corresponding law in force in that State under which he is liable to pay cess for the welfare of the construction workers and amount of cess actually paid along with the date of such payment and proof thereof. A copy of such application shall be endorsed to each of the Assessing Officer and the board concerned.
(2) On receipt of such application, the Central Government may, if it feels necessary, seek a report from the State Government concerned.
(3) On examining the grounds, facts and merits of such application the Central Government may, by notification in the Official Gazette, issue an order exempting the employer or class of employers, as the case may be, from payment of cess payable under the Act where such cess is already levied and payable under such corresponding law.
(4) Assessment proceedings shall be stopped by the Assessing Officer for a period of thirty days commencing from the date of the receipt of a copy of the application under sub-rule (1) to him, or till the order of the Central Government under sub-rule (3) is conveyed to an employer or class of employers who made the application under sub-rule (1), whichever is earlier.
12. Penalty for non-payment.—(1) An Assessing Officer, if it appears to him that an employer has not paid the cess within the date as specified in the assessment order or has paid less cess, including the cess deducted at source or paid in advance, shall issue a notice to such employer that it shall be deemed to be in arrears and such Assessing Officer may, after such inquiry as it deems fit, impose on such employer, a penalty not exceeding such amount of cess:
Provided that before imposing any such penalty, such employer shall be given a reasonable opportunity of being heard and if after such hearing the Assessing Officer is satisfied that the default was for any good and sufficient reason, no penalty shall be imposed on such employer.
13. Recovery of overdue amount.—For the purpose of recovery of sums due on account of unpaid cess, interest for overdue payment or, penalty under these rules, the Assessing Officer shall prepare a certificate signed by him, specifying the amount due and send it to the Collector of the district concerned who shall proceed to recover from the said employer the amount specified thereunder as if it were an arrear of land revenue.
14. Appeal.—(1) An employer aggrieved by an order of the assessment made under Rule 7 or by an order imposing penalty made under Rule 12 may appeal against such order, within three months of the receipt of such order, to the Appellate Authority.
(2) The appeal shall be accompanied with—
(a) the order appealed against;
(b) a certificate from the Cess Collector to the effect that the amount of cess or penalty or both, as the case may be, relating to such appeal has been deposited;
(c) a fee equivalent to one per cent of the amount in dispute or penalty or both, as the case may be, under such appeal;
(d) a statement of points in dispute;
(e) documentary evidence relied upon.
(3) On receipt of the appeal the Appellate Authority may call from the Assessing Officer a statement on the basis of his assessment order appealed against, as such Appellate Authority may consider necessary for the disposal of such appeal.
(4) The Appellate Authority shall give the appellant an opportunity of being heard in the matter and dispose of the appeal as expeditiously as possible.
(5) On being satisfied on the quantum of cess the Appellate Authority shall confirm the order of the Assessing Officer or if in his opinion the assessment was wrong or on the higher side shall modify the order of assessment or if in his opinion the assessment is on the lower side or if the basis of assessment is wrong, it shall remand back the assessment order to the Assessing Officer along with his observations to rectify the wrong.
(6) An order remanded back under sub-rule (5) shall be disposed of by the Assessing Officer within one month in view of the observation made by the Appellate Authority:
Provided that if the amount of cess is proposed to be enhanced the assessee shall be given an opportunity of being heard.
(7) No appeal shall lie against the order of the Appellate Authority under this rule.
(8) If the Appellate Authority is of the opinion that the quantum of penalty imposed is on the higher side or not correctly made it shall suitably modify or set aside the order of the Assessing Officer, as the case may be.
(9) The appeal under this rule shall be disposed of by making a speaking order and a copy of such order shall be sent to each of the appellant, the Assessing Officer and the Board within five days of the date on which such order is made.
(10) An order in appeal reducing the amount of cess shall also ask the Board to refund the excess cess.
(11) An order in appeal reducing, enhancing or confirming the orders of penalty, as the case may be, shall also specify the date by which the amount of penalty should be paid/refunded.”
19. The Respondent No.1, M/s CG Power and Industrial Solutions Limited (formerly known as M/S Crompton Greaves Limited) entered into a Framework Agreement with UPPTCL for construction of 765/400 KV Substations, at Unnao, Uttar Pradesh.
20. By a letter No. 130/ESD-765/2/CGL dated 5th March 2010, the Superintending Engineer, UPPTCL, Unnao placed a detailed order on the Respondent No.1 for construction of 765/400 kV Substation at Unnao on single source responsibility turn-key basis. The scope of the work as stated in the said letter was as follows:-
“1. Scope
1.1 The scope of this contract, hereinafter called “FIRST CONTRACT”, covers all works related to design, engineering, manufacturing, testing at works, supply of all required equipment and material with accessories and auxiliaries, as detailed in Schedule of Quantities & Prices (Annexure-IV) to sub-station site. The scope shall also include supply of any other item necessary for completing the scope of work without any extra cost, if not specified in above Schedule.
1.2 The “SECOND CONTRACT” shall cover unloading, handling at site, erection, testing and commissioning of all the equipment and material to be supplied by the contractor under first contract and any other work require to complete the scope for commissioning and handing over the entire sub-station.
1.3 the “THIRD CONTRACT” shall cover all civil works including material to complete the scope for commissioning and hading over of the entire substation.
1.4 The proposed sub-station shall be constructed as per scope of work (Doc. No.017806-47ES-0100) under the technical specification (Volume-II) and the specification drawings enclosed with the REP document.
1.5 The proposed sub-station will be comprised of following works:
1.5.1 765kV switchyard (one & a half breaker scheme)
(a) Two (2), 765kV feeder bays along-with 1x330MVAR shunt reactor in each bay
(b) Two (2), 765kV bays for 2x1000MVA Tranformer Bank
(c) One (1), 765kV bay for 189MVAR Bus Reactor Bank
d) 3 nos. spare 765kV bays
1.5.2 400kV switchyard is to be modified to accommodate Two (2), 400kV bays of 2x1000MVA, 765/400kV Transformer Bank in Double Main & Transformer Bus arrangement.
1.5.3 Electrical / Mechanical Auxiliaries & other Major Misc. works
a) 2x1000kVA, 33/0/4kV Transformers
b) G Set
c) Air conditioning Plant for each building
d) Lighting system for complete switchyard, buildings, streets and stores etc.
e) SDH communication system & PLCC communication
f) AC & DC Auxiliary Power supply system including Batteries, Battery charges, AC & DC distribution boards
g) Fire Fighting equipment
h) Any other work necessary for completion of sub-station”
Sub-para 5 of the said letter under the sub-heading “Nature of Contract” clearly provided that the work for the 765kV sub-stations on single source responsibility, turn-key basis shall be awarded through following four separate contracts:-
FIRST CONTRACT “Supply and Delivery of Equipment & Material”
SECOND CONTRACT “Handling, Erection, Testing and Commissioning Works”
THIRD CONTACT “Civil Works”
FOURTH CONTRACT “Three years O & M”
21. In terms of the said Framework Agreement, the work was split, and covered by four separate contracts. The first contract was for design, engineering, manufacture, testing at works and supply of all required equipment and materials with accessories and auxiliaries, as detailed in the said contract; the second contract covered erection, testing and commissioning at site including unloading, handling etc.; the third contract covered all civil works including materials for commissioning and handing over of the Substations and the fourth contract covered operations and maintenance for three years.
22. In sub-clause 5 of the said Frame Work Agreement, under the head “Nature of Contract”, it was clearly stated that the first and second contract shall cover all works other than civil works required to be completed. The first contract covered supply and delivery of all equipment and materials as per schedule of prices as contained in the concerned contract and any other item required to complete the scope of work for completion of sub-station including their performance and guarantees; the second contract covered unloading, handling at site, erection, testing and commissioning of all the equipment and material supplied by the contractor under the first contract and any other work required to complete the scope for commissioning and handing over of the entire sub-station. The third contract would cover all civil works including required materials under its scope.
23. Four separate contracts were executed by and between UPPTCL and the Respondent No.1. There can be no doubt that cess under the Cess Act is payable in respect of the Third Contract, which covers all civil works. The first and second contracts, which cover all works other than civil works, and do not involve any construction, do not attract cess under the Cess Act.
24. The penultimate paragraph of Clause 5 of the said Frame Work Agreement provided:-
“Nature of Contract
………….
The Contractor shall be fully responsible for the works to be executed under first three (3) Contracts and any breach or occurrence or default under one Contract shall automatically be deemed as a breach or occurrence or default of other Contracts, giving the Engineer absolute right to take appropriate action under any/all the Contracts including right to recover damages from any/all the Contracts or terminate any/all the Contracts. Any such breach or default or occurrence in any of the Contracts shall not relieve the Contractor of any of his responsibility/obligation under the other Contracts and no time extension shall be given to the Contractor on these grounds. The equipment/material to be supplied by the Contractor under the first Contract when installed and commissioned under the second Contract shall give satisfactory performance in accordance with provisions of the Contract. The signing of three (3) separate Contracts shall in no way dilute the insurance responsibility and obligations of the Contractor.”
25. The total value of (i) the First Contract (Supply) was 2750933042.00 (Two Hundred and Seventy Five Crores Nine Lakhs, Thirty Three Thousand and Forty Two), (ii) the Second Contract (Erection) was Rs.40129510.00 (Four Crores One Lakh, Twenty Nine Thousand Five Hundred and Ten), (iii) the Third contract (Civil) was Rs. 193808465.00 (Nineteen Crores Thirty Eight Lakhs Eight Thousand Four Hundred and Sixty Five) and (iv) the Fourth contract (Operations and Maintenance) was Rs.35737200.00 (Three Crores, Fifty Seven Lakhs Thirty Seven Thousand and Two Hundred).
26. In this context, it would be appropriate to refer to Clause 6 of the letter dated 5th March 2010, extracted hereinbelow:-
“6. Aggregate Contract Value
The sum of Contract values of first, second, third and fourth Contracts for 765/400kV sub-station at Unnao shall be the aggregate Contract value. The aggregate value of each contract shall be as under:-
