Ab Constructions and Co. Vs the State of Andhra Pradesh

¶1

i

¶2

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

¶3

WEDNESDAY, THE EIGHTH DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE - "

¶4

PRESENT

¶5

THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 420 OF 2025

¶6

Between: M/s. AB Constructions & Co., D.No.55-42-2/1, Doctors Colony, Seethammadhara, Visakhapatnam -530013 Rep. by its Managing^Partner V Mr.A.Balarama Raju. ...PETITIONER

¶7

AND

¶8

V''

¶9

1. The State of Andhra Pradesh, Rep. by its Principal^{Secretary,Andhra} Pradesh Tourism Department, Secretariat, Velagapudi,^Amaravathi, Guntur District, A.P.

¶10

1. Andhra Pradesh Tourism Development Corporation Ltd.,^D.No.55-17-2 to 4, 5th Floor, C.G.O. Complex, Industrial Estate, Auto Nagar,^{.^} Vijayawada -520007, A.P. Rep. by its Managing Director^"

¶11

The Superintending Engii^, Andhra Pradesh Tourism^Development Corporation Ltd., Vijayawada -520007, A.P

¶12

...RESPONDENTS

¶13

Petition under Article 226 of the Constitution of India praying that in

¶14

the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ, Order or direction more^{particularlyoneinthe} nature of Writ of Mandamus declaring the action of^{the3rdrespondentin} deducting the labour cess @1% of the bills paid at the instance of respondents 1 and 2 as illegal, arbitrary and in contravention^ofMemoNo.

¶15

.< 636 Reforms-A1/2008 dated 08-06-2011 and in contravention^ofBuilding and other Construction Workers Welfare Cess Act 1996^and the Rules made there under in Agreement No.15/SE/APTDC/Agmt/2023-24 dt.

¶16

f

¶17

24-11-2023 in respect of work'"upgradation and Renovation of Haritha Hotel of Yatrinivas at Visakhapatnam in Visakhapatnam District and consequently direct the respondents not to deduct the labour cess from the bills payable to the petitioner in Agreement No.15/SE/APTDC/Agmt^/2023- 24 dt.24-11-2023 without including the same as required to be included in terms of the Memo No. 636/Reforms-A1/2008 dated 08-06-2011. lA NO: 1 OF 2C)7fi

¶18

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 direct the respondents not to deduct the labour cess without adding the same from the bills of the petitioner in Agreement No. 15/SE/APTDC/Agmt/2023-24 dt.24-11-2023V/ in respect of work Upgradation and Renovation of Haritha Hotel of Yatrinivas at Visakhapatnam in Visakhapatnam District pending dispose of the above Writ Petition.

¶19

Counsel for the Petitioner: SRI P. L. NARASIMHA RAO^{^} Counsel for the Respondent No.1: GP FOR TOURISM Counsel for the Respondent Nos.2 & 3:SRI SATEESH KUMAR EERLA, SC FOR APTDCL ^ The Court made the following: ORDER

,n-

f

APHC010005732025

IN THE HIGH COURT OF ANDHRA PRADESH 050 AT AMARAVATI 0i?s (Special Original Jurisdiction)

¶24

0i?s

¶25

[3329]

¶26

WEDNESDAY ,THE EIGHTH DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE

¶27

PRESENT

¶28

THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

¶29

WRIT PETITION NO: 420/2025

¶30

Between:

¶31

Ab Constructions And Co

¶32

...PETITIONER

¶33

AND

¶34

The State Of Andhra Pradesh and Others

¶35

...RESPONDENT(S)

¶36

Counsel for the Petitioner:

¶37

1.P L NARASIMHA RAO

¶38

Counsel for the Respondent(S):

¶39

1.GP FOR TOURISM

¶40

The Court made the following:

¶41

9

¶42

THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

¶43

WRIT PETITION.NQ.420 OF 2025

¶44

ORDER:-

¶45

This writ petition is filed under Article 226 of the^{ConstitutionoftheIndia}

¶46

seeking the following reliefs;-

¶47

to issue a Writ, Order or direction more particularly one In the^ nature of Writ of Mandamus declaring the action of the 3" respondent in deducting the labour cess @1% of the^{billspaidatthe} instance of respondents 1 and 2 as illegal, arbitrary and in contravention of Memo No.636/Reforms-A1/2008 dated^08.06.2011 and in contravention of Building and other Construction Workers Welfare Cess Act, 1996 and the Rules made there under in Agreement No.15/SE/APTDC/Agmt/2023-24, dt.24.11.2023 in respect of work “Upgradation and Renovation of Haritha^Hotelof Yatrinivas at Visakhapatnam in Visakhapatnam District” and consequently direct the respondents not to deduct the^labourcess from the bills payable to the petitioner in Agreement No.15/SE/APTDC/Agmt/2023-24 dt.24.11.2023 without Including^the same as required to be included In terms of the Memo No.636/Reforms-A1/2008, dated 08.06.2011 and pass such other order or orders...

¶48

Heard learned counsel for petitioner and Sri Sateesh^{Kumar,learned} Standing Counsel for AP Tourism Corporation appearing^{forrespondentNos.2} and 3.

¶49

When the matter is taken up for hearing, learned counsel for the petitioner would submit that the issue involved in^{thisWritPetition} is squarely covered by the order dated 20.09.2023 passed by this^Court in Writ Petition No. 16156 of 2020 and batch and requested to pass a^similarorder in this writ

¶50

petition also.

¶51

'■Na

¶52

For better understanding the operative portion of the^{saidorderreadsas}

¶53

follows:

¶54

“...Therefore, the writ petitions are disposed of, with the following directions:

¶55

a. The respondents shall verify the bills of the petitioners^and if the corresponding amount is included In the estimates, the respondents can deduct amount as prescribed at the^rateof1% towards Labour Cess,

¶56

b. Upon verification, if the respondents found that the corresponding amount is not included In the estimates, the respondent shall not take steps to deduct the amount/recover^the amount from the petitioners towards Labour Cess....”

¶57

The same is not disputed by the learned Standing Counsel appearing for the respondents.

¶58

In view of the same, let there be a similar order in this case, following the identical lines as in Writ Petition No. 16156 of 2020 and batch, dated 20.09.2023.

¶59

In the result, the Writ Petition is disposed of with the following directions:

¶60

a. The respondents shall verify the bills of the petitioner^and if the corresponding amount is included in the estimates, the respondents can deduct amount as prescribed at the rate of 1% towards^LabourCess.

¶61

b. Upon verification, if the respondents found that the corresponding amount is not includedTn the estimates, the respondent shall not take steps to

¶62

deduct the amount/recover the amount from the petitioner^towards Labour Cess.

¶63

Registry is directed to attach a copy of the order^{passedbythisCourtin} Writ Petition No.16156 of 2020 and batch dated 20.09.2023,^{tothisorder.No} costs.

¶64

Consequently, miscellaneous petitions, pending, if any, shall stand

¶65

closed.

¶66

//TRUE COPY//

¶67

SD/- M.PRABHAKARA RAO ASSISTANT' GISTRAR

¶68

SECTl

¶69

To,

¶70

Pradesh Tourism De^rtment, State of

¶71

1. The Principal Secretary, Andhra Andhra Pradesh, Secretariat, Velagapudi, Amaravathi, Guntur District,

¶72

A.P.

¶73

The Managing Director, Andhra Pradesh Tourism Development

¶74

17-2 to 4, 5th Floor, C.G.O. Complex,

¶75

Corporation Ltd, D.No.55

¶76

Industrial Estate, Auto Nag^ijayawada -520007, A.P.

¶77

Andhra Pradesh Tourism Development

¶78

1. The Superintending Engineer Corporation Ltd., Vijayawada -52000A A.P

¶79

One CC to Sri P. L. Narasimha^ao, Advocate [OPUC] 5. One CC to Sri Sateesh Kumar, SC for APTDCL[OPUC]

¶80

High Court of Andhra Pradesh. [OUT]

¶81

1. Two CCs to GP for Tourism,

¶82

Three CD Copies.

¶83

of the order in W.P. No.16156 of 2020 and Batch (Along with a copy dated 20.09.2023, to this order)

Ssb

HIGH COURT

DATED:08/01/2025

ORDER

WP.No.420 of 2025

4
o D 7 FE8 2125
. Current Section . ^

¶90

DISPOSING OF THE W.P. WITHOUT COSTS

¶91

THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

¶92

W.P.Nos.16156, 318, 522, 3055, 4086, 12758. 14257 14853. 15917, 15979, 21720. 25604 OF 2020;

¶93

W.P.Nos. 3154, 3672 OF 2021

¶94

W.P.Nos.5951. 15800, 17273, 17650, 18490, 18550, 18574, 18576, 18797, 19336, 19377 OF 2019;

¶95

W.P.Nos.20177. 30641, 30672 OF 2018;

¶96

W.P.No.34074 OF 2017

¶97

COMMON ORDER:-

¶98

The petitioners in these batch of writ petitions are civil contractors registered with various departments of the Government. The departments and agencies that entrusted works to the petitioners are taking steps to deduct Labour Cess @ 1% from the bills payable to the petitioners.

¶99

According to the petitioners, when the works were entrusted, the recovery of 1% labour cess was not contemplated and^{nosuchamountat} the rate of 1% was included in the work estimates prepared by the respondents. The grievance of the petitioners is that, without^includingthe amount towards Labour Cess @ 1% in the work estimates,^{thesamecannot} be recovered and the respondents did not empower for effecting deduction of the said Labour Cess amount at 1% out of bills payable to the petitioners.

¶100

Respondents filed counter affidavit seeking to justify^{theiractionin} proposing to recover the amount towards Labour Cess^anddenied their obligation in inclusion of proposed labour cess amount^{inworkestimates}

¶101

2

¶102

NV.J WP No. 16156 of 2020 & batch

¶103

as claimed by the petitioners. It is submitted that, as per norms of the contract, m Condition No.7.3.2, Labour Cess @ 1% is provided in the Schedule-A Part-II (B). While making payment to the contractor, the amount will be paid to the Labour Department proportionately as per rules and Labour Cess will be recovered from the bills of the contractors amount. but not from the amount kept in Schedule A- Part-II (B). It is submitted that payment of Labour Cess is the responsibility of the contractor and deduction from the bills and remittance to the board is the responsibility of the Government.

¶104

Heard learned counsel for the petitioners and learned Government Pleader for the respondents. 5. The workers in the construction field are unorganized as well as unregulated and are not governed by the various legislations that are intended for the benefit of workmen of various industries and other sectors. With a view to take effective welfare measures for them, as like the other regulated work force, the Parliament enacted the Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (‘1996 Act’ for short). Various aspects such as creation of fund, registration of workers/beneficiaries and issuance of identity cards were provided for. Committees are constituted at state and central levels to regulate the system and to see the welfare measures to reach the unorganized work force/labour in the civil construction sector.

¶105

3 NV,J WP No. 16156 of 2020 &, batch

¶106

For the purpose of pooling necessary resources and to augment finances to carry out the objectives under the 1996^Act, the Parliament enacted the Building and other Construction Workers^{WelfareCessAct,} 1996 (‘Cess Act’ for short). This makes it obligatory^{onthepartofthe} employers to pay to the competent authority, cess at^{prescribedrate,which} shall not be more than 2 % and less than 1% out of^thevalue of the construction as determined under the provisions of^theAct.

¶107

The 1996 Act and Cess Act were enacted with the avowed policy and the object of protecting the interests of workers engaged^{inthebuildings} and other civil construction activity. These enactments^applyto all the persons or institutions, which engage not less than 10 workers in construction or building work in the preceding twelve^{months.Themanner} in which the cess is to be administered is provided^{forundertheAct.The} Cess Act enables the competent authority to recover^{orcollectcessatthe} prescribed rate which shall be between 1% and 2%. It is stated that the notification that was issued in this regard stipulates^{thecessattherateof} 1% only.

¶108

The burden of payment in the form of cess must be borne^bythe agency which undertakes the construction. It is not^{anobligationthatcan} be placed upon the contractors. The element of this levy cannot be compared with the service charges or profession tax^{whicharesquarely}

¶109

k

¶110

4

¶111

NV,.J WPNo.l6I56of2020 & batch

¶112

referable to the activity undertaken by the person or agency not the one for or on behalf of whom the activity is undertaken.

¶113

It is not disputed that this Court, by order dated 22.10.2009 earlier held in a batch of writ petitions in W.P.Nos. 11269 of 2009 & batch that the Government cannot be permitted to deduct the amount while making payments to the contractors and the occasion for an agency to deduct cess under the Cess Act would arise only when the corresponding^amount is included in the work estimates and conversely if the amount representing the cess is not included in the work estimates, deductions cannot be made while making payments to the contractors. The above batch of writ petitions were disposed of with the following directions:

¶114

(a) That the respondents shall include 1% cess in the estimates for the works which they propose to undertake, if the^work continues for or beyond twelve months and involves engagement of 10 workers or more; and

¶115

(b) That the respondents shall not deduct any amount towards cess, unless the corresponding amount is included in the estimates.

¶116

Assuming that there existed any justification for their omission to include the amount payable towards cess in the work estimates, they cannot be permitted to deduct that amount while making payments to the contractors. In a way, it would amount to either penalizing^{thecontractor}

¶117

or affecting the levy contrary to the provisions of 1996 Act. The consequences that flow from any violation of 1996 Act must in fact be directed towards agency that has undertaken construction. Therefore, the

¶118

5

¶119

NV,J WPNo.16156 of 202061 batch

¶120

inescapable conclusion is that the occasion for an agency to deduct the cess under the Cess Act would arise only when the corresponding^amount is included in the work estimates. Conversely, if the amount representing the cess, is not included in the estimates, deductions^{cannotbemadewhile} making payments to the contractors.

¶121

In W.P.Nos. 11269 of 2009 & batch dated 22.10.2009 and W.P.No.6090 of 2011 dated 11.04.2012, the High Court^{ofAndhraPradesh} at Hyderabad observed that, the inaction on the part^ofthe respondentsⁱⁿ not refunding the amount already collected towards^LabourCess is held unsustainable and held that the petitioners were entitled for the amount recovered from them.

¶122

One of the contention made by the learned Government^Pleader is that the ratio laid down by the Division Bench of the High Court of Andhra Pradesh in W.A.No.l012 of 2013 & batch dated 06.08.2015 is applicable to the present facts of the case, as such the petitioners^{arenotentitledto} refund of already deducted amount and the respondents^{areatlibertyto} deduct the amount at the rate of 1% of cess from the bills payable to the petitioner. The question involved in W.A.No.l012 of²⁰¹³ 86 batch was “whether the works executed by the petitioners in the factory are the works incidental to and/or connected with the works of the^{factoryandthus} exempted from the provisions of The Building and Other Construction Workers’ (Regulation of Employment and Conditions of^{Service)Act,1996.} In the said case, the case of contractors, in short,^isthatthe company^isa

¶123

6

¶124

NV.J WP No.16156 of 2020 & batch

¶125

factory established under Act of 1948 and is, therefore, expressly excluded from the application of the provisions of Act No.27. According to contractors, under any circumstances, factories of the companies are covered by the provisions of Act of 1948, and are, therefore, not liable to pay 1% cess under the provisions of Act No.28. The provisions contained in Act No.27, in particular, the definition of “building^{orotherconstruction} work” would not cover the structures such as blast furnace and, therefore, they are not liable to either deduct 1% cess or remit any such amount to the Government under the provisions of the said Act.

¶126

On perusal of the above judgment, it is evident that the question involved in the said case was as to applicability of Labour Cess. But, in the present case, the question involved was whether the petitioners are entitled for such reduction in Labour Cess or not, as such,^{theratiolaiddownin} W.A.No.1012 of 2013 & batch cannot be applied to the present facts of the case, and the contention of the learned Government Pleader is rejected.

¶127

Whether it is a case of proposed deduction from the^{billsorthecase} of refund of the amounts already deducted, the respondents have no right to recover any amount from the contractors towards cess without first including the same in the estimates and such deduction^{towardscessfrom} the bill amounts without there being any corresponding^inclusion of the said amount in the estimates is bad in law and the petitioners are certainly not liable for deduction from their bills. The action of the respondents in

¶128

7

¶129

NV.J WPNo.l6156of2020 & batch

¶130

proposing to deduct the Labour Cess @ 1% from the bills payable to the petitioners is therefore held unsustainable.

¶131

Whether it is a case of proposed deduction from the^{billsorthecase} of refund of the amounts already deducted, the respondents have no right to recover any amount from the contractors towards cess without first including the same in the estimates and such deduction^{towardscessfrom} the bill amounts without there being any corresponding^{inclusionofthe} said amount in the estimates is bad in law and the petitioners are certainly not entitled for deduction from the bills.

¶132

Therefore, the writ petitions are disposed of with the following directions:

¶133

a. The respondents shall verily the bills of the petitioners^and if the corresponding amount is included in the estimates, the respondents can deduct amount as prescribed at the^rateof 1% towards Labour Cess,

¶134

b. Upon verification, if the respondents found that the corresponding amount is not included in the estimates, the respondent shall not take steps to deduct the amount/recover the amount from the petitioners towards Labour Cess.

¶135

Consequently, miscellaneous applications pending if any, shall also stand closed.

¶136

JUSTICE VENKATESWARLU NIMMAGADDA

¶137

Date:20.09.2023 SP

Ab Constructions and Co. v. the State of Andhra Pradesh

Case brief

What is this about?

What did the court decide?

Ab Constructions and Co. v. the State of Andhra Pradesh

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Damarla Venkata Naga Siva Vs the Reserve Bank of India

M/s. Srinesh Industries, Vs Andhra Pradesh Industrial Infrastructure Corporation Limited

Betharaju Manjula Vs State of Andhra Pradesh

Kiran T Vs Union of India

Grr Enterprises Vs Sri Shashibhushan Kumar, IAS

Shaik Syyad Vs The State of Andhra Pradesh