Disposed

M/s. Steel Exchange India Limited, v. The Special Chief Secretary

Andhra Pradesh HC20 Mar 2023WP/5411/2023

Case brief

AI extract

What is this about?

The High Court disposed of a writ petition challenging a notice calling for Cess payment on construction costs. The court held the notice violated the right to be heard as it demanded payment without allowing the petitioner to file explanations. Directions were given to allow submission of explanations pending a fresh order.

What did the court decide?

The impugned notice dated 23.01.2023 is treated as a notice to explain. Petitioner granted time to submit explanations within four weeks. No coercive steps allowed.

M/s. Steel Exchange India Limited, Vs… — Public Procurement and Tenders | Andhra Pradesh HC (2023)

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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) t

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MONDAY, THE TWENTIETH DAY OF MARCH j B TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SMT JUSTICE V.SUJATHA

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WRIT PETITION NO: 5411 OF 2023

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Between:

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M/s. Steel Exchange India Limited, Integrated Steel Plant, Sreerampuram Village 535161 L. Kota Mandal, Vizianagaram District, Andhra Pradesh Represented by its General Manager (HR), Aged about 57 years, Shri. Bala Krishna Pavuluri, S/o Late Shri Satyanarayana.

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...PETITIONER

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AND

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

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The Special Commissioner of Labour, Andhra Pradesh, Seetharampuram, Vijayawada.

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• 'I

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The Joint Commissioner of Labour, Zone 1, Akkayyapalem, Visakhapatnam.

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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 declaring the impugned Notice Dt.23-1-2023 and other connected notices, 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 there under and The Building And Other Construction Workers Welfare Cess Act, 1996 and Rules made there under and also offends 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.

lA NO: 1 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased to direct the Respondents not to take any coercive action in pursuance of the impugned Notice Dt.23-1-2023 and other connected Notices 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: SRI. Y SURYA PRASAD

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Counsel for the Respondent No. 1 to 3: GP FOR LABOUR

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The Court made the following: ORDER

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THE HON’BLE SMT JUSTICE V. SUJATHA

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Writ Petition No.5411 of 2023

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ORDER:

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The present writ petition came to be filed under Article 226 of the

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Constitution of India seeking the following relief:

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"....to issue a writ or order more particularly in the nature of Mandamus declaring the impugned Notice Dt.23.1.2023 and other connected notices, 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 there under and The Building And Other Construction Workers Welfare Cess Act, 1996 and Rules made there under and also offends 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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2. Brief facts of the case are that the petitioner company is having a factory registered under the Factories Act, 1948 at Sreerampuram Village - 535 161, L.Kota Mandal, Vizianagaram District, Andhra Pradesh. Learned counsel for the petitioner submitted that the petitioner Factory after plan approvals and registration under the Factories Act, 1948, commenced construction of the additional two units in the existing Factory Land (where one unit already existing) Buildings, structures etc., to locate the Plant and' Machinery in July, 2008 at the Factory site; and completed the construction and erection of Plant Machinery and commenced “manufacturing process” as a Factory in February, 2011.

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The petitioner management had constructed the Buildings, Roads, Drains and other civil structures to install ictory sheds utilizing the

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services of local maistries and workers by purchasing the material from the vendors; and plant and machinery from the Suppliers.

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On 23.01.2023, the 2nd respondent issued a notice informing that the petitioner’s plea, that Cess is not payable on material cost and plant and machinery, is not correct and further informed that there is no provision in the main Act or Cess Act to the extent that Cess is only payable in respect of civil works involving labour component excluding materials and plant machinery.

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The petitioner company replied to the notice issued by the 2nd respondent vide letter dated 16.02.2023 that they are liable to pay 1% Cess on Rs.7,34,15,950/- only on the labour cost on the cost of construction involved and requested for an opportunity of hearing on the question of Law.

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6. However, the 2nd respondent issued notices vide Memo No.Review Meetings/2021 dated 09.07.2021 (Annexure P2) stating that to pay Cess on the entire project cost and rejected the petitioner’s contention to levy Cess only on labour cost in civil constructions.

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7. On perusal of the said impugned notice dated 23.01.2023, it is averred that the management failed to submit the returns in Form-1 within 30 days before the commencement of Construction work as per Section 4(1) of BOC Workers Welfare Cess Act and Rule 6(1) of Cess Rules and also failed to send any notice of commencement of Building or other construction work before thirty days of commencement of construction work as per Section 46(1) of the Building and Other Construction Workers Main Act and the

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(

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Management has also failed to pay the Cess within 30 days of completion of your Establishment as per Rule 4 of Cess Rules pertaining to time and manner of collection.

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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’ and that is as

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follows:

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“4. Furnishing of Returns -

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(1) Every employer shall furnish such return to such officer or authority, in such manner and at such time as may be prescribed.

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(2) 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. ”

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9. On perusal of the impugned notice, it would show that as the petitioner has failed to submit his returns, the said notice was given under Section 4(2) of the Cess Act and further the petitioner was directed to pay the Cess amount of Rs. 1,27,98,000/- which, admittedly, is in violation of the Rule 4(2) of the Cess Act which speaks about notices given only if no returns are submitted, but by giving a notice, the said amount cannot be directed to be paid by the petitioner. The said Cess amount can be fixed only after considering the explanations made by the petitioner, but even without receiving the explanation from the petitioner, such an order cannot be passed.

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In view of the same, the impugned notice dated 23.01.2023 shall be considered as a notice and the petitioner is directed to submit his

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explanation, if any, within a period of four (4) weeks from today and after duly considering the said explanation, the respondent authorities may pass appropriate orders strictly in accordance with law and communicate with the petitioner within a period of eight (8) weeks thereafter. Till such time, no coercive steps shall be taken by the respondents for the recovery of the said Cess amount as in the notice dated 23.01.2023.

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Accordingly, this Writ Petition is disposed of. No costs.

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As a sequel, miscellaneous application, pending, if any, shall also stand closed.

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To. 1.

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Sd/- M. PADMALATHA
ASSISTANT REGISTRAR
//TRUE COPY//
SECTION OFFICER

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vSjlylwlda ‘-abour, Andhra Pradesh, Seetharampuram,
3. The Joint Commissioner of Labour, Zone 1, Akkayyapalem, Visakhapatnam.
4. One CC to Sri. Y Surya Prasad Advocate [OPUC]
6 Two CD C^optes of Andhra Pradesh. [OUT]

CSB

HIGH COURT

DATED;20/03/2023

ORDER

WP.No.5411 of 2023

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(I > I SEP 2023 I
Cuirsnt SKtion