Disposed

Mithra Kyokuto Spv Co. Pvt. Ltd. v. the Special Chief Secretary

Andhra Pradesh HC29 Mar 2023WP/11889/2021

Case brief

AI extract

What is this about?

The High Court disposed of a writ petition and related interim petitions challenging Show Cause Notices levying cess. Following a prior order in W.P. No. 16090 of 2021, the court treated the notices as fall under Section 4(2) of the Cess Act, directed the petitioner to submit an explanation, and mandated the authorities to pass final orders post-hearing.

What did the court decide?

The impugned notices treated as notices under Section 4(2); petitioner directed to submit explanation within four weeks; authorities directed to pass final orders within eight weeks of explanation sub

Mithra Kyokuto Spv Co. Pvt. Ltd. Vs the Special… — Property and Title | Andhra Pradesh HC (2023)

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IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAV/Vjfe^

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(Special Original Jurisdiction)

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WEDNESDAY, THE TWENTY NINETH DAY OF MARCH© TWO THOUSAND AND TWENTY THREE P,

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PRESENT:

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THE HONOURABLE SMT. JUSTICE V. SUJATHA

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WRIT PETITION NO: 11889 OF 2021

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Between:

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Mithra Kyokuto Spv Co Pvt Ltd, Rs.No.192/7B, Veerapanenigudem (V)- 521286 Gannayaram mandal, Krishna Dt., A.P. Represented by Mr. V. Balaji, 55 years S/o. Sri Venkatachalam, ChiefOperating Officer

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...PETITIONER

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and

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The Special Chief Secretary, Labour, Employment and Factories Department, Govt, of Andhra Pradesh, AP Secretariat, Amaravathi

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The Joint Commissioner of Labour, Zone 2, Eluru -534002, West Godavari Dt.

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...RESPONDENTS

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Petition under Article 226 of the Constitution of India praying that in the ’ circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ or order more particularly in the nature of Mandamus quashing the impugned Show Cause Notice RC. No. C/3307-4/2017 Dt.26-52021 and Dt.13-7-2018 issued by the 2"*^ Respondent declaring it as illegal-being contrary to the provisions of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and Rules made thereunder and The Building And Other Construction Workers Welfare Cess Act, 1996 and Rules made thereunder and also offends the Article 14 of the Constitution of India besides violating the principles of natural justice further declaring that the Cess is not payable on the materials supply, designing supplying and erection of Plant and Machinery.

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lA NO: 1 OF 2021

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.Petition Ajnder Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the Respondents not to take any coercive action in pursuance of the impugned Show Cause Notice Rc.No. C/3307-4/2017 Dt.26-5-2021 and Dt.13-72018 issued by the 2nd Respondent and stop alJ further proceedings upon such Showing Cause Notice pending disposal of the main Writ Petition.

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{

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lA NO: 2 OF 2021

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Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to take into consideration, further actions of the 2"*^ Respondent and direct the Respondents not to take any coercive action in pursuance of the impugned Show Cause Notice Rc.No.C/330-4/2017 Dt.26-5-2021 and Letter Dt.13-7-2018 Issued by the 2" Respondent and stop all further proceedings upon such Notice pending disposal of the main Writ Petition.

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Counsel for the Petitioner : M/s. NWS BHAVANI

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Counsel for the Respondents 1 & 2 : GP FOR LABOUR

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The Court made the following : ORDER

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HONOURABLE SMT. JUSTICE V.SUJATHA

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WRIT PETITION No. 11889 of 2021

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ORDER:

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The present Writ Petition came to be filed under Article 226 of the Constitution of India seeking the following relief:-

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“...to issue a writ or order more particularly in the nature ofMandamus quashing the impugned Show Cause Notice Rc. No. C/3307-4/2017 Dt. 26-52021 and Dt. 13-7-2018 issued by the 2'^ Respondent declaring it as illegal being contrary to the provisions of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and Rules made thereunder and The Building And Other Construction Workers Welfare Cess Act, 1996 and Rules made thereunder and also effends the Article 14 of the Constitution of India besides violating the principles of natural justice; further declaring that the Cess is not payable on the materials supply, designing, supplying and erection of Plant and Machinery and pass such other orderer orders...."

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2. It is stated in the affidavit filed in support of the writ petition as under:

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The management of the petitioner after obtaining necessary plan approvals and registration under the Factories Act, 1948, commenced construction of the buildings, structures etc., in die premises proposed to be used as “factory” in Survey No.l92/7B

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of Veerapanenigudem Gannavaram Mandal, Krishna District in the year 2011 and completed the constructions and started production in October, 2012.

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It is further case of the petitioner that the construction, of buildings, roads, drains and other civil structures are made to install Factory sheds, plant and Machinery by the Petitioner Management directly utilizing the services of local Maistries and workers and the construction material was purchased by the petitioner from the vendors directly. Further, construction of Administrative Building, Godowns and other amenities rooms etc., were undertaken at a cost of Rs. 10.03 Crores, which include the Concrete READY MIX of Rs.203.85 Lakhs.

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The material used in the construction were purchased by the company directly from the vendors at a cost of Rs. 13.27 Crores and pre-operative expenses were Rs.3.85 Crores (For 2010-2012 salaries, conveyance, interest on loans etc.,) and plant and other machinery was supplied and erected by the Vendors at a cost of Rs.26.39 Crores.

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It is further case of the petitioner that, the 2nd respondent issued notice Vide Rc.No. C/3307-4/2017 dated 26.05.2021 and dated 13.07.2018, stating that the Vigilance and Enforcement

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Department has pointed out that the estimated cost of construction is Rs.58;66 Grores-and as such the petitioner has to pay Cess of Rs.58,66,000/t on the total cost of construction, or else, action will be taken under the relevant provisions of the Act for recovery of cess amount together with penalty equivalent to the cess amount and interest at the rate of 2% for every month, for which, the petitioner submitted his Reply dated 11.06.2021. Since the impugned show cause notices were issued without following the provisions envisages under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and Cess Act and Rules made thereunder, the present writ petition has been filed. 6. Today, when the matter came up for hearing, it is represented by the learned Government Pleader for Roads 86 Buildings and acceded to, by the learned counsel for the petitioner that the subject matter of this Writ Petition is squarely covered by the order passed by this Court in Writ Petition No. 16090 of 2021, dated 30.06.2022, wherein tiiis Court-held as

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follows:

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In view of the submissions made by both the learned counsel, with the consent of both the counsel, without going into merits of this case, this Court feels it appropriate to dispose of the petition with the following directions:

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(a) The impugned notice Rc.No.C/1884-220/2012, dated 19.06.2021 be treated as a notice under Section 4(2) of the Building and Other Construction Workers" Cess Act, 1996.

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(b) The petitioner is directed to submit explanation within four (04) weeks from today granting permission to raise all the pleas available in addition to the explanation already submitted on 20.07.2021.

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(c) On submission of the explanation, the respondent authorities are directed to. pass appropriate orders strictly in accordance with law and communicate the same to the petitioners within eight (08) weeks thereafter.

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(d) There shall be no order as to costs”.

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• 5

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7. Hence, following the said order passed by this Court in W.P.No. 16090 of 2021 and this Writ Petition is also disposed of in the same lines as follows:

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(a) The impugned notices vide Rc.No.C/33074/2017 dated 26.05.2021 and 13.07.2018 be treated as a notice under Section 4(2) of the Building and Other Construction Workers" Cess Act, 1996.

appropriate orders strictly in accordance with law and communicate the same to the petitioners within eight (08) weeks thereafter.

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Accordingly, this Writ Petition is disposed of. There shall be no order as to costs.

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Office to attach copy of order in W.P.No. 16090 of 2021 to

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this order.

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Miscellaneous petitions pending, if any, in this Writ

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Petition shall stand closed.

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SD/- K. SRINIVASA RAJU ASSISTANT REGISTRAR

//TRUE COPY//

SECTION OFFICER

To.
1. The Special Chief Secretary, Labour, Employment and Factories Department
Govt, of Andhra Pradesh, AP Secretariat, Amaravathi
2. The Joint Commissioner of Labour, Zone 2, Eluru -534002, West Godavari Dt
3. One CC tp M/s. NWS BHAVANI Advocate [OPUC]
4. ■ Two GC^o GP FOR LABOUR ,High Court Of Andhra Pradesh. fOUT]
(Alorig With ordercopy.in W.P. No.16090 of 2021)
VSR • • ,,« ?/■’

HIGH COURT

DATED:29/03/2023

ORDER

WP.No.11889 of 2021

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andh^
2 3 SEP 2023
. Current Section

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DISPOSING THE WP WITHOUT COSTS

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f^.V.yfo.J6090 of2021

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■ 1

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HON'BLE SRI JUSTICE RAVI CHEEMALAPATI

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WRIT IN No. 16090of 2021

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ORDER:

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This Writ Petition has been filed by the petitioner invoking jurisdiction of this Court under Article 226 of the Constitution of India for the following

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relief:

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"...issue a writ or order more particularly in the nature of Mandamus quashing the impugned notice R.C.No.C/1884-220/2012, dated 10.06.2021 issued by the 2’*’ respondent declaring it as illegal being contrary to the provisions of the Building and Other Construction Workers (Regulation .of Employment and Conditions of Service) Act, 1996 and Rules made thereunder and the Building and Other Construction Workers Welfare Cess ACT, 1996 and Rules made thereunder and also offends the Article 14 of the Constitution of India besides violating the principles of natural justice, further declaring that the Cess is not payable on the materials supply, designing, supplying and erection of Plant and Machinery " 2. The case of the petitioner, in brief, is that the management of the petitioner after plan approvals and registration under the Factories Act, 1948, commenced construction of the buildings, structures etc., to locate the plant and machinery in 2009 at Veeravalli village, Bapulapadu Mandal, Krishna District and completed the constructions and erection of plant and machinery and commenced production as a factory on 31.03.2010. It is the further case of the petitioners that construction of sheds and installation of plant and machinery was done by utilizing the services of local maistries and workers and the construction material was purchased by the petitioner from the vendors directly and the total expenditure incurred was Rs.79.42 crores. which includes the cost of materials supplied of Rs.54.58 crores and labour component cost of Rs.24.84 crores. It is the further case of the petitioners that the 2"“ respondent in his notice R.C.NO.C/1884-.220/2012, dated

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10.06.2021 stating that since the vigilance and Enforcement Department has pointed out that the estimated cost of construction is Rs.58.17 crores, the petitioner has to pay Cess amount of Rs.58,16,900/- and directed the z petitioner to produce all relevant documents and also to pay 1% cess on the total cost of construction or else action will be taken under the relevant provisions of the Act for recovery of cess amount together with penalty equivalent to the cess amount and interest at 2% for every month. The petitioner has submitted his reply vide Letter dated 20.07.2021. Since the impugned show cause notice was issued without following the provisions envisages under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act,1996 and Cess Act and Rules made thereunder, the present writ petition has been filed.

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Resisting the claim of the petitioner, the 2*** respondent filed counter affidavit justifying the quantum of cess demanded in the impugned notice contending that as per the provisions Cess Act and Cess Rules, the petitioner has to pay Cess on the total cost of construction. It is further stated that if the petitioner is aggrieved on the quantum of cess levied the appropriate authority to adjudicate the same is the Assessing Officer and thus the writ petition is not maintainable and hence prayed to dismiss the writ petition.

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Heard , learned counsel for the petitioner and the learned Advocate General for the respondents.

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The learned counsel for the petitioner in elaboration to what has been stated in the affidavit has contended that the impugned notice cannot be termed as a notice as contemplated under Section 4(2) of the Building And

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VCJ ‘tV.9.2fo.l6090 of2021

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Other Construction Workers' Welfare Cess Act, 1996 Act (for short, 'the Act) since it contained a direction to the petitioner to pay the cess amount of Rs,58,16,900/- and to submit all the relevant documents and thus the authorities have straight away passed an order without affording an opportunity to the petitioner to put forth his case and thus it is contrary to Section 4(2) of the Act and also against the principles of natural justice and thus the impugned notice has to be set aside.

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On the other hand, the learned Advocate General though supported the quantum of cess levied under the impugned notice, has submitted that section 4(2) of the Act mandates issuance of a notice before passing order of assessment and further submitted that based on the report of the Additional Superintendent of Police & Regional Vigilance & Enforcement Officer, Guntur dated 24.11.2015 the impugned notice has been issued levying cess

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mentioned therein.

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In view of the above submissions, this Court feels it -relevant to extract Section 4 of the Act, which deals with 'Furnishing of returns'.

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It is evident as per sub Section-2 of Section-4 of the Act that if any person carrying on the building or other construction work fails to furnish any return, the authority shall give a notice requiring him to furnish return.

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•H<V.;Nb.l6090 of2021

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z-''?

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A perusal of the impugned notice would goes to show that the same contains a direction to the petitioner to pay the amount levied towards 1% of cess and thus the same cannot be termed as a notice as mandated under sub Section-2 of Section 4 of the Act.

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At this juncture, the learned Advocate General has submitted that the impugned order may be treated as a notice under Section 4(2) of the Act and a direction may be given to the petitioner to submit its explanation and on receipt of such explanation, the authorities, after due consideration of the explanation submitted by the petitioner, would pass appropriate orders levying cess amount payable by the petitioner.

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The learned counsel for the petitioner has agreed for such a course to follow and submitted that reasonable time maybe afforded to the petitioner to submit his explanation. The learned counsel for the petitioner has further contended that liberty may be given to the petitioner to raise all the grounds in its explanation in addition to the grounds already taken while submitting explanation dated 20.07.2021.

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In view of the submissions made by both the learned counsel, with the consent of both the counsel, without going into merits of this case, this Court feels it appropriate to dispose of the petition with the following directions: .

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(a) The impugned notice Rc.No.C/1884-220/2012, dated 19.06.2021 be treated as a notice under Section 4(2) of the Building and Other Construction Workers' Cess Act, 1996.

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(b) The petitioner is directed to submit explanation within four (04) weeks from today granting permission to raise all the

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‘f4i9.Mb.l6090 of2021

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pleas available in addition to the explanation already submitted on 20.07.2021.

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^i*f‘

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(c) On submission of the explanation, the respondent authorities are directed to pass appropriate orders strictly in accordance with law and communicate the same to the petitioners within eight (08) weeks thereafter. W) There shall be no or-der as to costs.

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As sequel thereto, miscellaneous petition, if any, pending shall stand closed. Interim orders, if any, shall stand vacated. JUSTICE RAVI CHEEMALAPATI 30“’ June, 2022 RR

Mithra Kyokuto Spv Co. Pvt. Ltd. v. the Special Chief Secretary

Case brief

What is this about?

What did the court decide?

Mithra Kyokuto Spv Co. Pvt. Ltd. v. the Special Chief Secretary

Case brief

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