The Supreme Court in the case of Uttar Pradesh Power Transmission Corporation Limited v. CG Power and Industrial Solutions Limited, [SLP(C) No. 8630 of 2020, decided on May 12, 2021], adjudicated upon the scope of applicability of certain provisions of the Building and Other Construction Workers’ Welfare Cess Act, 1996 (‘BOCWW Act’) and of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Act, 1996 (‘BOCW Act’).
The matter stemmed out of a framework agreement (‘said Agreement’) entered into between the parties for construction of 765/ 400 KV substations at Unnao, Uttar Pradesh. The work was awarded through 4 (four) separate contracts, the scope of work for the same were as follows:
It would be pertinent to note that sub-clause 5 of the said Agreement, under the head “Nature of Contract”, it was clearly stated that the first and second contract shall cover all works other than civil works required to be completed.
The respondent no. 1 had duly performed the First Contract and thereafter there was an audit inspection for the period of April 2012 to April 2016. In the audit report it was noted that the petitioner no. 1 had lapsed in deducting cess under the BOCWW Act and the BOCW Act. Subsequently, the petitioner no. 1 by a letter dated December 29, 2018 directed the executive engineer of the petitioner no. 1 to deduct the cess from the pending invoices of the respondent no. 1 in relation to the First Contract.
Against this backdrop the petitioners had filed a writ petition before the Allahabad High Court challenging the letter dated December 29, 2018. The Allahabad High Court held that no cess is payable under the BOCWW Act or the BOCW Act and accepted the submission of the respondent no.1 that in the absence of levy and assessment under the acts and rules framed thereunder and also in the absence of any order for levy and assessment under the BOCWW Act and the BOCW Act no recovery could be made based on an audit inspection.
Judgment and Analysis:
A special leave petition was filed against the judgment of the Allahabad High Court. The Supreme Court upheld the ruling of the High Court on the following grounds:
Please find a copy of the judgment here.
This update has been contributed by Pooja Chakrabarti (Partner) and Prithwish Roy Chowdhury (Associate).
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