VS,J W.P.No.23945 of 2025 APHC010458292025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3333] THURSDAY,THE ELEVENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SMT JUSTICE V.SUJATHA WRIT PETITION NO: 23945/2025 Between: 1. M/S HES INFRA PRIVATE LIMITED,, REP., BY ITS MANAGING DIRECTOR, VENKATA RAMAKRISHNAM RAJU INDUKURI, S/O JANAKI RAMA RAJU INDUKURI, AGED ABOUT 63 YEARS, OCC CONTRACTOR, PLOT NO.39, B.N REDDY COLONY, ROAD NO. 14, BANJARA HILLS, HYDERABAD. ...PETITIONER AND 1. THE STATE OF ANDHRA PRADESH, REPRESENTED BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF IRRIGATION (WRD), SECRETARIAT BUILDINGS, VELAGAPUDI, AMARAVATHI 2. THE CHIEF ENGINEER PROJECTS, WATER RESOURCES DEPARTMENT ANANTHAPURAMU 3. THE SUPERINTENDING ENGINEER, HNSS, CIRCLE NO.I, KURNOOL, KURNOOL DISTRICT 4. THE EXECUTIVE ENGINEER, AVR HNSS DIVISION NO.3, KURNOOL, KURNOOL DISTRICT. 5. THE STATE OF ANDHRA PRADESH, REPRESENTED BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF FINANCE AND PLANNING, SECRETARIAT BUILDINGS, VELAGAPUDI, AMARAVATHI, GUNTUR DISTRICT ...RESPONDENT(S): 2 VS,J W.P.No.23945 of 2025 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 tomay be pleased to issue an order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the Respondents herein in deducting the 1percent Labour Cess to an amount of Rs.79,65,036/- from the Final Bills of the Petitioner in relation to the work Widening of HNSS main canal from K.M. 79.075 to K.M. 134.000/134.270 vide Agreement No 4- SE/2017-2018, Dt. 26.05.2017 despite there is no prior condition for deduction in the Agreement/Estimates itself as nothing but illegal, arbitrary and violative of fundamental and Constitutional Rights guaranteed under Article 21 of The Constitution of India apart from contrary to the Common Orders of this Honble Court in W.P.No. 16156 of 2020 and batch, Dt. 20.09.2023 and consequently direct the respondents to refund the deducted 1percent Labour Cess amount of Rs.79,65,036/- and pass such IA NO: 1 OF 2025 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 may be pleased to direct the respondents to refund the deducted 1% Labour Cess amount of Rs.79,65,036/- from the petitioner’s final bills in relation to the work i.e.. Widening of HNSS main canal from K.M. 79.075 to K.M. 134.000/134.270 vide Agreement No: 4-SE/2017-2018, Dt. 26.05.2017 pending disposal of the above Writ Petition and pass such Counsel for the Petitioner: 1. SURESH KUMAR REDDY KALAVA Counsel for the Respondent(S): 1. GP FOR IRRI AND CAD 2. GP FOR FINANCE PLANNING The Court made the following: 3 VS,J W.P.No.23945 of 2025 HONOURABLE SMT. JUSTICE V.SUJATHA WRIT PETITION No.23945 of 2025 ORDER: The present Writ Petition came to be filed under Article 226 of the Constitution of India seeking the following relief:- “….to issue an order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the Respondents herein in deducting the 1%t Labour Cess to an amount of Rs.79,65,036/- from the Final Bills of the Petitioner in relation to the work i.e., “Widening of HNSS main canal from K.M.79.075 to K.M.134.000/134.270 vide Agreement No: 4-SE/2017- 2018, Dt.26.05.2017” despite there is no prior condition for deduction in the Agreement/Estimates itself as nothing but illegal, arbitrary and violative of fundamental and Constitutional Rights guaranteed under Article 21 of the Constitution of India apart from contrary to the Common Orders of this Hon’ble Court in W.P.No.16156 of 2020 and batch, Dt.20.09.2023 and consequently direct the respondents to refund the deducted 1% Labour Cess amount of Rs.79,65,036/-…” 2. Heard the learned counsel for the petitioner, learned Assistant Government Pleader for Irrigation appearing for respondent Nos.1 to 4 and the learned Assistant Government Pleader for Finance and Planning appearing for respondent No.5. 3. Learned counsel for the petitioner would submit that the issue involved in this writ petition is squarely covered by the order of the erstwhile High Court of Andhra Pradesh at Hyderabad dated 22.10.2009 passed in W.P.No.11269 of 2009 and batch and hence, the present writ petition may also be disposed of in terms thereof. The same is not disputed by the learned Assistant Government Pleaders appearing for the respondents. But, the learned 4 VS,J W.P.No.23945 of 2025 Assistant Government Pleaders would contend that the petitioner is not entitled to refund the amount already deducted. The relevant portion of the above mentioned order reads as follows: “1996 Act and Cess Act were enacted with the avowed policy and the object of protecting the interests of workers engaged in the building activity. These enactments apply to the persons or institutions, which engage not less than 10 workers in construction 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 1%. The burden in the form of cess must be borne by the agency that undertakes the construction. It is not an obligation that can be placed upon the contractors. The incidence of this levy cannot be compared with the service charges or profession tax which are squarely referable to the activity undertaken by the person or agency not the one for or on behalf of whom the activity is undertaken. Obviously to ensure proper enforcement of the provisions of the enactments, the state Government issued directions from time to time to the departments concerned to add an amount of 1% to the estimates. In U.O.Note dated 28.02.2008, the finance department tendered the following advice: (i) In respect of ongoing works, wherever agreements do not contain the clause relating to the condition 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 for all payments made after 26.6.2007. (ii) In respect of agreements which provide that the Contractor shall pay Cess at the rate not exceeding 2% of the cost of Construction under the Building and other Construction Workers Cess Act, 1996, the Contractor has no option but to Pay Cess by way of deduction at source effective from 26.6.2007. Independent of the said note, the departments of the Government are expected to recognize their obligation under 1996 Act. Assuming that there existed any justification for their omission to include the amount payable towards cess in the estimates, they cannot be permitted to deduct that amount while making payments to the contractors. In a way, it would amount to either penalizing the contractor 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 5 VS,J W.P.No.23945 of 2025 that has undertaken construction. Therefore, the 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 estimates. Conversely, if the amount representing the cess, is not included in the estimates, deductions cannot be made while making payments to the contractors. Therefore, the writ petitions are disposed of directing that: - (a) 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) the respondents shall not deduct any amount towards cess, unless the corresponding amount is included in the estimates.” 4. Adopting the reasoning mentioned in the aforesaid order dated 22.10.2009 in W.P.No.11269 of 2009 and batch, a learned Single Judge of the erstwhile High Court of Andhra Pradesh at Hyderabad dealt with the refund of amount already deducted from the bills at para 4 of the order dated 11.04.2012 in W.P.No.11269 of 2009, as follows: “4. ……… …….. …… The learned Government Pleader would, however, seek to draw a distinction by contending that the above cases related to recovery of the amount by way of cess but not refund of the amount already collected. Whether it is a case of proposed deduction from the bills or the case of refund of the amounts already deducted, the ratio laid down in the above judgment applies equally. When once it is held that 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, the petitioner would certainly be entitled for refund of the said amount which is already deducted from the bills. The inaction on the part of the respondents in not refunding the amount already collected towards labour cess is, therefore, held unsustainable and the petitioner is certainly entitled for the relief prayed for, in view of 6 VS,J W.P.No.23945 of 2025 the earlier judgments of this Court in the above batch of writ petitions.” 5. In view of the above, this Court is of the opinion that the present case is squarely covered by the above orders of this Court and the petitioner is entitled for refund of the amount which was already deducted from the bills. 6. Accordingly, the Writ Petition is disposed of in terms of the aforesaid order dated 22.10.2009 passed in W.P.No.11269 of 2009 and batch. There shall be no order as to costs. As a sequel, miscellaneous applications, pending, if any, shall also stand closed. ____________________ JUSTICE V.SUJATHA Date :11.09.2025 JLV