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M/S. Premier Plastic Industries v. State of Telangana

Telangana HC10 Sept 2024WP/16389/2018

Case brief

AI extract

What is this about?

The High Court disposed of a writ petition challenging the deduction of labour cess by government departments. Relying on a prior batch judgment, the court directed respondents to include the cess in estimates and prohibited deductions unless the amount was incorporated in the initial estimates.

What did the court decide?

Directing respondents to include 1% cess in estimates for works continuing beyond twelve months with 10+ workers, and not to deduct any amount unless it is included in estimates.

M/S. Premier Plastic Industries Vs State of Telangana — Service and Employment | Telangana HC (2024)

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[³³⁰² ]

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HIGH COURT FOR THE STATE OF^TELANGANA AT HYDERABAD (Special Original Jurisdiction)

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TUESDAY, THE TENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HONOURABLE SRI JUSTICE^{K. SARATH}

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WRIT P ETITION NO: 16389 OF 2018

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Between:

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M/s Premier Plastic lndustries,^rep.by its^{Partner, VinayAgrawal,} S/o. Ravindra Agrawal, aged^{about 35 years, 33 GroundFloor,A-1, Karim} Trade Centre, Ranigunj, Secunderabad-500003

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...PETITIONER

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AND

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1 State of Telangana, Rural Water^{and Sanitation Department, Panchayat Raj} and Rural Development, Secretariat,^{Hyderabad, Rep.by its Principal} Secretary.

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2 The Engineer- in- Chief, Rural Water Supply^{and Sanitation Department,} SRTGN Bhavan, sth Floor,^{Erramanzil,Hyderabad.}

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3 The Superintendent Engineer, RWS andS^{Circle, Sangareddy,tvledakDistrict.}

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4 The Executive Engineer, RWS and S^{Division, Medak, Medak District-}

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5 The Assistant Pay and Accounts^{Officer,IVedak,Medak District.}

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...RESPONDENTS

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Petition under Article 226 ot lhe Constitution^{of lndia prayingthat in the} circumstances stated in the affidavit^{filedtherewith' the High Courtmay be} pleased to issue a writ or order or direction more^{particularlyin the natureof writ} of Mandamus declaring the action^{of the 2nd respondentissued in memo No.} AE/DEE(VIGyVandE/Labour Cess /^{RWSandSworks/2017dated 28-11-2017 and} the consequential action of the 4th^{respondentin deductingthe labourcess1} percent from the running bills for the work referred to in the aEreement^{No. AEE2L} ---t2O13-14 dated 04-07-2014 as illegal, arbitrary^{and one without jurisdictionand} consequently direct the respondent^{to refund the withheld amount with interest at} 1B percent.

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IANO:1O F 2018

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Petition under sectron 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to restrain the respondents from recove ring/ded ucting 1 percent rabour cess from the running account bi's/work birs of the petitioner in respect of the work being executed in pursuance of the agreement No. AEE2/-- --2013-14 dated 04_07_2014 pending disposal of the W. p

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Counsel for the petitioner: SRI VENKATESWERLLU KESAMSETry Counsel for the Respondent Nos.1 to 4: Gp FOR PANCHAYAT RAJ RURAL DEVELOPMENT

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Counsel for the Respondent No.5: Gp FOR FINANCE AND PLANNING

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The Court made the following: ORDER

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"ffi -.t=* 'tl ,/,

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THE HON'BLE SRI JUSTICE K.SARATH WRIT PETITION No.16389 OF 2018

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ORDER:

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This writ petition is filed questioning action^{of the} respondent No.2 in resorting to^{recover 17o labour cess from} the petitioner's contract works without^{adding same to the} Gross amount of the bill.

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o Heard both sides and perused the^record.

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3 When the matter is taken up for hearing the^leamed Counsel for the petitioner would^{submits that the lis in the} writ petition is squarely covered by orders^{in W'P.No.1 1269 of} 2OO9 and batch dated 22.IO.2OO9^{and requested to pass} similar order in this writ petition. The same^{is not disputed} by the learned Assistant Government^{Pleaderfor Panchayat} Raj and Rura-l Development^{appearingfor the respondents.}

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4 Having regard to the facts and circumstances^{of the} \ case, the orders passed by this court in t'l.e writ petition \

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referred to above and for the reasons alike, the^presentwrit

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ia^rt;

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SK'J w.P.No.16389 of 2018

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petition is disposed of in terms of orders passed 1n W.P.No. L7269 of 2OO9 and batch dated 22.LO.2O09.

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5 1S Accordingly, this writ petition disposed of directing that:

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I. The respondents shall include 1%o cess in the estimates for the works which they, propose to undertake, if the work continues for or beyond twelve months and involves engagoment of 1O workers or more; and

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II. The respondents sha-ll not deduct any amount towards cess, unless the corresponding amount is included in the estimates.

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6 The Registry is directed to annex copy of Order

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dated 22.10.2009 passed in W.P.No.77269 of 2009 and batch.

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As a sequel thereto, miscellaleous applications, if any

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pendi4g, qhall stand closed.

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To,

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The Principal Secretary, State of Telanqana, Rural Water and Sanitation

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^^{pepltment,Panchaya-tflaj andRuralD-evelopment. Secretariat,Hyderabad.} Z. ][e_!1gfeer- in-Chief, Rural Water Suppty ahd Sanitation Department, -^{IRTGNBhavan, sth Floor, Erramanzil,Hycierabad}

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The Superintendenl Engineer, RWS andS Circle, Sangareddy, Ir/edak District

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The Executive Engineer, RWS and S Division, N/edak:Meda( District.

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The Assistant Pay and Accounts Officer, t\rledak, Medak Djstrict.

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One CC to Sri Venkateswerllu Kesamsetty, Advocate topUCI 7. Two CCs to GP for Panchayat Raj Rural Development, High iourt for the _^{Stateof Telangana, at Hydeiabad} 1OUTI

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Two CCs to fhe GP for Finance arid planning, High Court lor the State of Telangana. at Hyderabad[OpUC]

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9- Two CD Copies

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WP.No.16389 of 2018

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DISPOSING OF THE WRIT PETTTION WITHOUT COSTS Y ?) 3 *rt u ']^c"qiE)

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.:i:

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/-:'

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THE HON'BLE SRI JUSTICE L. NARASIMHA REDDY

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WRIT PETITION Nos.11269. 13395. 13996. 14314. 15672. 16098. 16162. 16684. 17084. 17 424. 17836. 1 8615. 1 8623. 1 9042. 21434.21973.22454. 22476.22494 and 22605 ol 2009

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EOMMON OBDER:

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The workers in the construction Field are unorganized and are not governed by the various legislations lhat are intended for the benefit ol workmen of industries and factories. With a view to take welfare measures lor them, lhe Parliament enacted the Building and other Construction Workers (Regulalion of Employment and Conditions ol Service) Act, 1996 (1996 Act' tor short). Various aspects such as creation of tund, registration of workers/beneficiaries and issuance of identity cards were provided for. Committees are constiluted at state and central levels to regulate the system.

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For the purpose of pooling necessary resources and to augment finances to carry out lhe objectives under the 1996 Act, the Parliament enacted the Building and other Construction Workers Welfare Cess Act, 1996 ('Cess Act' for short). This makes il obligatory on the pad of the employers to pay to the competent authority, cess at prescribed rate, which shall not be more than 2 7. and less than 1%.

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The petitioners in this batch of writ petitions are civil contraclors regislered with various departments of Government. The departments and agencles that entrusted works to the petitioners are taking steps to deduct cess @ 17. lrom the bills payable to the petitioners. The grievance ol the petitioners is lhal the agencies concerned are not including the component of cess in the estimates and are burdening them by eflecting deduction ol that amount. They place reliance upon orders issued by the Government from time to time, including U.O. Note dated 28.02.2008, through which the finance department of

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Government of Andhra Pradesh required the various departments undertaking construction works to include cess at 17o in the estimates. These writ petitions are liled with a prayer to dlrect the respondents concerned to include 17o amount in lhe estimates towards labour cess.

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On behall of the respondents, counter affidavits are filed in some writ petitions. The scope of the relevant enactments is explained and it is pleaded that necessary directions have been issued to the deparlments concerned to ensure that 1% cess is rncluded in the estimates. Exception is claimed as regards the works that have already been commenced, by the time the directions came to be issued.

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Heard the learned counsel for the petitioners, the learned Government Pleaders lor Finance & Planning, Roads & Buildrngs, lrrigation & Command Area Development, Social Welfare and Panchayat Raj & Rural Develpment and the learned standing counsel Ior the other institutronal respondents.

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1996 Act arrd Cess Act were enacted with the avowed policy and the object of protecting the inlerests of workers engaged in the building aclrvrty. These enactments apply to the persons or institutions, which engage not less than^'10 workers in constructron o burlding work in thc preceding twelve months. The manner in which the cess is to be administered is provided for under the Act. The Cess Act enables the competent authority to recover or collect cess al the prescribed rate which shall be between 1"k and 2k. lt is stated that the notification thal was issued in this regard stipulates lhe cess at 1y.

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The burden rn the form of cess must be borne by the agency that undortakes the construction. lt is not an obligation that can be placed upon the contractors. The incidence ot this levy cannot be compared

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with the service charges or profession tax whrch are squarely referable to the activity undertaken by the person or agency nol the one for or on behalf ol whom the activity is undertaken. Obviously to ensure proper enlorcemenl of the^provisions of lhe enaclments, the slale Government issued direclions from time to time to the departments concerned to add an amount of 1% to the estimates. ln U.O.Note dated 28.02.2008, the finance department lendered the followrng advice:

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(i) ln respect of ongoing works, wherever agreements do not contain the clause relating to the condrtion of the Building and other construction Workers Cess Act, an amount of @ 1% of the amount will be added to the estimates and the estimates revised accordingly lor all payments made after 26.6.2007.

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(ii)

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ln respect of agreements which^provide that the Contractor shall pay Cess at lhe rate not exceeding n" ot lhe cost ot Conslruction under the Building and other Construction Workers Cess Act,^,l996, the Contraclor has no oplion but to Pay Cess by way of deduclion at source effective from 26.6.2oo7.

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lndependent of the said note, the departments of the Government are expected to recognize their obligatlon under 1996 Act.^Assuming that there existed any^{juslitication} for their omission to include the amount payable towards cess in the estimates, they cannol be permitted to deduct that amount while making payments to the contractors. ln a way, it would amount to elther^penalizing the contractor or atfecting 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 inescapable conclusion is that the occasion for an agency to deduct the cess under lhe Cess Act would arise only^when the corresponding amount is included in the estimates. Conversely,^if the amount representing the cess, is not included in the eslimates, deductions cannol be made while making^payments to the contractors.

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Therefore. the writ petitions are disposed of directing that:^-

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(a) the respondents shall include 17. cess in the estimates for lhe works which they^propose to undertake, il the work contnues for or beyond twelve months and involves engagement of 10 workers or more; and

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

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There shall bc no order as to costs.

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L. NARASIMHA REDDY, J

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22nd October, 2009 Note: lssue CC rn one waek (B/o) GHN

M/S. Premier Plastic Industries v. State of Telangana

Case brief

What is this about?

What did the court decide?

M/S. Premier Plastic Industries v. State of Telangana

Case brief

What is this about?

What did the court decide?

What the court decided

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