Response

You stated that you had previously sold your business, but you did not provide details of your sales agreement or the contract you had with your labour contractor.

The Building and Other Construction Workers’ Welfare Cess (BOCWW Cess) is regulated by the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, and the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

The Building and Other Construction Workers’ Welfare Cess Act, 1996, has a section 3 that discusses contractor liability.

The Supreme Court of India held in the cases of Builders Association of India vs UOI [(139) 2007 DLT 578] and New India Construction Company vs State of Haryana that the objective of the Building and other constrcution workers’ Act was not to limit its applicability to either the owner or the contractor, but to cover both. Either the owner or the contractor should be liable for the cess.

If the cess is not collected from the contractor, the court has suggested that it be collected from the owner.

In the matter of Delhi metro train corporation limited vs simplex infrastructures limited, the Delhi High Court ruled that deducting the amount of cess from bills of contractor.

Reference: Section 3 in THE BUILDING AND OTHER CONSTRUCTION WORKERS’ WELFARE CESS ACT, 1996

Levy and collection of cess.Ñ

(1) There shall be levied and collected a cess for the purposes of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, 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.

(2) 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.

(3) 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.

(4) Notwithstanding anything contained in sub-section (1) or sub-section (2), the cess leviable under this 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 on the basis of the quantum of the building or other construction work involved. – 202100352-20210041-11190 –

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