R ■ R APHC010412042025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) WEDNESDAY,THE TWENTIETH DAY OF AUGUST TWO THOUSAND AND TWENTY FIVE PRESENT HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 21366 OF 2025 -JiT Between: Bommineni Ramanjaneyulu, s/o. Venkata Narasimha Rao, Aged about 61 years, Special Class Contractor, D.No.5-349, NGO Colony, Endluru Village, S.N.Padu Mandal, Ongole -523002, Prakasam District, A.P ...Petitioner AND 1. TheStateofAndhraPradesh, rep. by its Principal Secretary Panchayat Raj and Rural Development, Secretariat, Velagapudi, Guntur District, A.P. 2. The Engineer-in-Chief, Rural water supply and sanitation Department, 5th Floor, C Block, Near LIC Colony, Saipuram Vasudha Shelters Colony, Gollapudi, Vijayawada, A.P. 3. The Project Director Shelters 4th SWSM, RWS and S Department, Vasudha Floor, C Block, Near LIC Colony, Saipuram Colony, Gollapudi, Vijayawada, A.P., Superintending Engineer, Rural Water Supply and Sanitation Circle, Ananthapuramu, A.P. 5. The Executive Engineer, Rural water supply and sanitation Division, Ananthapuramu,A.P. 4. The ...Respondents 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, Order or direction more particularly one in the nature y of Writ of Mandamus declaring the action of the respondents 4 and 5 in deducting the labour cess @1 % of the bills paid at the instance of respondents 1 to 3 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 Agreement no /AEE1/JJMAV/idapanakal/1156.00L/2023 Dt.26-10-2023 in respect of Mandal wise Packing of works for’Providing Drinking Water Facilities to all the needy habitations through 100 % FHTCs with 55 LPCD service level in 19 habitations of Vidapanakal Mandal of Uravakonda Constituency in Ananthapuramu District” and consequently to direct the respondents not to deduct the labourcess from the bills payable to the petitioner in Agreement No./AEE1/JJMA/idapan^l/1156.00L/2023 Dt.26-10-2023 without including the same as required fdbe included in terms of the Memo No. 636/Reforms-A1/2008 dated 08-06-2011. lA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated r there under in in the affidavit filed in support of the petition, the Fligh Court may be pleased to direct the respondents not to deduct the labour cess from the bills of the petitioner Agreement No./AEEI/JJMA/idapanakal/l 156.00L/2023 Dt.26-10- 2023 in respect of Mandal wise Packing of works for “Providing Drinking Water Facilities to all the needy habitations through 100% FHTCs with 55 of Uravakonda LPCD service level in 19 habitations of Vidapanakal M Constituency in Ananthapuramu District” pending dispose of the above Writ Petition and pass. Counsel for the Petitioner: SRIP L NARASIMHA RAO Counsel for the Respondents: GP FOR PANCHAYAT RAJ RURAL DEV The Court made the following Order: r APHC010412042025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3329] WEDNESDAY.THE TWENTIETH DAY OF AUGUST TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 21366/2025 Between; BOMMINENI RAMANJANEYULU, S/0. VENKATA NARASIMHA RAO, ABOUT 61 YEARS. SPECIAL CLASS CONTRACTOR, D.N0.5- COLONY, ENDLURU VILLAGE, S.N.PADU MANDAL, ONGOLE -523002, PRAKASAM DISTRICT, A.P. 1. AGED 349, NGO ...PETITIONER AND ■ ANDHRA PRADESH, REP. BY ITS PRINCIPAL PANCHAYAT RAJ AND RURAL DEVELOPMENT, 1.THE STATE OF SECRETARY I SECRETARIAT, VELAGAPUDI, GUNTUR DISTRICT, A.P SUPPLY AND RURAL WATER ...E ENGINEERINCHIEF, SANITATION DEPARTMENT, VASUDHA SHELTERS, 5TH FLOOR, C NEAR Lie COLONY, SAIPURAM COLONY, GOLLAPUDI, 2.THE BLOCK, VIJAYAWADA, A.P. ..._ PROJECT DIRECTOR, SWSM, RWS AND S DEPARTMENT, VASUDHA SHELTERS 4TH FLOOR, C BLOCK, NEAR LIC COLONY, SAIPURAM COLONY, GOLLAPUDI, VIJAYAWADA, A.P. 3.THE 4.THE SUPERINTENDING ENGINEER, RURAL WATER SUPPLY AND SANITATION CIRCLE, ANANTHAPURAMU, A.P. 5.THE EXECUTIVE ENGINEER, RURAL WATER SUPPLY AND SANITATION DIVISION, ANANTHAPURAMU.A.P. ...RESPONDENT(S); instance of respondents 1 to 3 o^IIpLi k? ^ ^ Memo No. 636/Reforms- A1/2008 datefos 06 mTi h °f B..d,no a. .oer Consfroc.Jw^ ^ /AEE1/JJMA/idapanakal/1156.00LGoL Dm'lo Tnoa ' ^^reemerTt :.. habitations of Lapanakal ln7, T , Ananthapuramu District and conseqoent^ to ^00?^" re deduct the labourcess from th^ hiiie u, ^ ^ respondents not to /AEE1/JJMA/idapanakal/1156.001^023^ W ^6^ o’^M^r^'tl!'' the same as required to be includpH in t u without including A1/2008 dated 08-06-2011 and pass ° ^ ^ Memo No. 636/Reforms- one in and the no No. jA NO: 1 OF 9()9R ;rrr ""sx: “'“'.t*™ "• “• ssi”'».»r"s.*" “.r* r with 55 LPCD service ilvel in ® ‘trough 100% FHTCs above Writ Petition and pars Pending dispose of the Counsel for the Petitioner: 1.P L NARASIMHA RAO Counsel for the Respondent(S): 1.GP FOR PANCHAYAT RAJ RURAL The Court made the following: may be pleased DEV THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION.N0.21366 OF 2025 ORDER;- This writ petition is filed under Article 226 of the Constitution of the India seeking the following reliefs:- “to issue a Writ, Order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents 4 and 5 in deducting the labour cess 1 % of the bills paid at the instance of respondents 1 to 3 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 /AEEI/JJM/Widapanakal/1156.00U2023 Agreement Dt.26.10.2023 in respect of Mandal v/ise Packing of works for “Providing Drinking Water Facilities to all the needy habitations through 100% FHTCs with 55 LPCD service level in 19 habitations of Vidapanakal Mandal of Uravakonda Constituency in Ananthapuramu District" and consequently to direct the respondents not to deduct the labour cess from the bills payable to the petitioner in Agreement No. without no. Dt. 26.10.2023 /AEE 1/JJM/Vidapanakal/1156. OOL/2023 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... Heard learned counsel for petitioner and learned Government Pleader for 2. the respondents. When the matter is taken up for hearing, learned counsel for the petitioner would submit that the issue involved in this Writ Petition 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 similar order in this writ 3. petition also. For better understanding the operative portion of the said order reads as 4. follows; “...Therefore, the writ petitions are disposed of, with the following directions: 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 rate of 1% towards Labour Cess, 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.. ." 5. The same is not disputed by the learned Government Pleader appearing for the respondents. 6. 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. 7. In the result, the Writ Petition disposed of with the following IS directions: a. The respondents shall verify the bills of the petitioner and if the corresponding amount is already included in the estimates, the respondents are entitled to deduct amount as prescribed at the rate of 1% towards Labour Cess. b. Upon verification, if the respondents found that the corresponding amount is not included in the estimates, the respondent shall not take steps either to deduct the amount or to recover the amount from the petitioner’s bills towards Labour Cess. Registry is directed to attach a copy of the order passed by this Court in 8. Writ Petition No.16156 of 2020 and batch dated 20.09.2023, to this order. No costs. Consequently, miscellaneous petitions, pending, if any, shall stand^ closed. Sd/- K.KASI RAO ACHAR! ASSISTANT REGISTRAR //TRUE COPY// /! ^ , SECTION OPPJCFR To, The Principal Secretary Panchayat Raj and Rural Development, Secretariat, Velagapudi, Guntur District, A.P. The Engineer-in-Chief, Rural water supply and sanitation Department, Vasudha Shelters, 5th Floor, C Block, Near LIC Colony, Saipuram Colony^,i^oHapu^di, Vijayawada, A.P. The Project Director, SWSM, RWS and S Department, Vasudha Shelters* 4tli Floor, C Block, Near LIC Colony, Saipuram Colony, Gollapudi, Vijayawada, A.P. The Superintending Engineer, Rural Water Supply and Sanitation Circle, Ananthapuramu, A.P. The Executive Engineer, Rural water supply and sanitation Division, Ananthapuramu,A.P. One CC to Sri P L Narasimha Rao, Advocate [OPUC] Two CCs to GP for PANCHAYAT RAJ RURAL DEV, High Court of Andhra Pradesh [OUT] Two CD Copies 1. 2. 3. 4. 5. 6. 7. 8. Vna *along with the copy of the order passed by this court in Writ Petition No.16156 of 2020 and Batch dated 20.09.2023. HIGH COURT DATED:20/08/2025 ORDER WP NO. 21366 OF 2025 I nsEPJoa t . Current becuon . ^ ‘"4£e*MTC^ DISPOSING OF THE WRIT PETITION WITHOUT COSTS THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA W.P.Nos. 16156. 318, 522. 3055, 4086. 12758. 14257, 14853, 15917. 15979. 21720. 25604 OF 2020: W.P.Nos. 3154. 3672 OF 2021 W.P.Nos.5951. 15800, 17273. 17650. 18490. 18.5.«^n^ 18574, 18576, 18797, 19336. 19377 OF 2019: W.P.Nos.20177, 30641. 30672 OF 2018; W.P.No.34074 OF 2017 COMMON ORDER;- 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. 1. 2. According to the petitioners, when the works were entrusted, the recovery of 1% labour cess was not contemplated and no such amount at the rate of 1% was included in the work estimates prepared by the respondents. The grievance of the petitioners is that, without including the amount towards Labour Cess @ 1% in the work estimates, the same cannot 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. 3. Respondents filed counter affidavit seeking to justify their action in proposing to recover the amount towards Labour Cess and denied their obligation in inclusion of proposed labour cess amount in work estimates 2 NV,J WP No. 16156 of 2020 &, batch f as claimed by the petitioners. It is submitted that, as per norms of the contract, in 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. 4. 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. 3 NV,J WPNo.l6156of2020 & batch For the purpose of pooling necessary resources and to augment 6. finances to carry out the objectives under the 1996 Act, the Parliament enacted the Building and other Construction Workers Welfare Cess Act, 1996 (‘Cess Act’ for short). This makes it obligatory on the part of the employers to pay to the competent authority, cess at prescribed rate, which shall not be more than 2 % and less than 1% out of the value of the construction as determined under the provisions of the Act. The 1996 Act and Cess Act were enacted with the avowed policy and 7. the object of protecting the interests of workers engaged in the buildings and other civil construction activity. These enactments apply to all the persons or institutions, which engage not less than 10 workers in constmction or building work in the 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 at the prescribed rate which shall be between 1% and 2%. It is stated that the notification that was issued in this regard stipulates the cess at the rate of 1% only. The burden of payment in the form of cess must be borne by the agency which undertakes the construction. It is not an obligation that can be placed upon the contractors. The element of this levy cannot be compared with the service charges or profession tax which are squarely 8. 4 NV,J WP No, 16156 of 2020 & batch not the one for referable to the activity undertaken by the person or agency behalf of whom the activity is undertaken. or on 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 deduct the amount while making It is not 9. Government cannot be permitted to payments to the contractors and the occasion for an agency to deduct cess under the Cess Act would arise only when the corresponding amount included in the work estimates and conversely if the amount representing the cess is.not included in the work estimates, deductions cannot be made The above batch of writ IS while making payments to the contractors, petitions were disposed of with the following directions. (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 (b) That the respondents shall not deduct any amount towards cess, unless the corresponding amount is included in the estimates. Assuming that there existed any justification for their omission to in the work estimates, they 10. include the amount payable towards cess cannot be permitted to deduct that amount while making payments to the contractors. In a way, it would amount to either penalizing the contractor of 1996 Act. The affecting the levy contrary to the provisions or violation of 1996 Act must in fact be consequences that flow from any directed towards agency that has undertaken construction. Therefore, the 5 NV,J WP No.16156 of 2020 &. batch 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 cannot be made while making payments to the contractors. W.P.Nos. 11269 of 2009 8s batch dated 22.10.2009 and W.P.No.6090 of 2011 dated 11.04.2012, the High Court of Andhra Pradesh the part of the respondents in 11. In at Hyderabad observed that, the inaction on refunding the amount already collected towards Labour Cess is held not unsustainable and held that the petitioners were entitled for the amount recovered from them. 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 8s batch dated 06.08.2015 is applicable to the present facts of the case, as such the petitioners are not entitled to refund of already deducted amount and the respondents are at liberty to 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 of 2013 8s 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 factory and thus 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, is that the company is a 12. 6 NV,J WP No. 16 ] 56 of 2020 & batch 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 or other construction 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. 13. 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, the ratio laid down in W.A.No.1012 of 2013 86 batch cannot be applied to the present facts of the case, and the contention of the learned Government Pleader is rejected. 14. Whether it is a case of proposed deduction from the bills or the case 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 towards cess from 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 7 (r NV,J WP No. 16156 012020 & batch proposing to deduct the Labour Cess @1% from the bills payable to the petitioners is therefore held unsustainable. Whether it is a case of proposed deduction from the bills or the case of refund of the amounts already deducted, the respondents have no right to recover any amount from the contractors towards cess without first 15. including the same in the estimates and such deduction towards cess from 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 entitled for deduction from the bills. 16. Therefore, the writ petitions are disposed of with the following directions: 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 rate of 1% towards Labour Cess, 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. 17. Consequently, miscellaneous applications pending if any, shall also stand closed. JUSTICE VENKATESWARLU NIMMAGADDA Date:20.09.2023 SP