APHC010035952019 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) K MONDAY, THE TWENTY FIRST DAY OF JULY TWO THOUSAND AND TWENTY FIVE PRESENT THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 1639 OF 2019 Between: M/s. Velko Infratech Projects Pvt. Ltd.. Rep by its Managing Director, Sri Velagapudi Rama Rao, S/o. Veera Raghavaiah, Aged 70 years, R/o. H.No.59- 10-2, Gayathri nagar, Vijayawada. ...Petitioner AND 1. The State of A.P., Rep. by its Principal Secretary, Panchayat Raj & Rural Develepment, Secretariat, Velagapudi, Amaravati 2. The Engineer-in-Chief, RWS and Sanitation, Sanitation (APRWSSP), vasudha shelters Guntur District A.P. Rural Water Supply & 3rd floor C Block, Near LIC colony, saipuram colony, Gollapudi, Vijayawada-521 225. 3. The Chief Engineer-ll, RWS and Sanitation A.P. Rural Water Supply & Sanitation (APRWSSP), vasudha towers. 3rd floor C block, near LIC colony, Saipuram Colony, Gollapudi, Vijayawada-521 225. 4. The Superitending Engineer, RWS and Sanitation Visakhapatnam, A.P. (APRWSSP), Visakhapatnam, Rural Water Supply & Sanitation Visakhapatnam District, A.P. State. 5. The Executive Engineer Visakhapatnam District, A.P. State. RWS & S Division, Visakhapatnam ...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 of writ of mandamus declaring the action of the respondents 4 and 5 in deducting the labour cess @ 1% of the bills payable to the petitioner 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 agreement No 142/2016-17, dt.30.01.2017, in respect of work CPWS Scheme to Gannavaram and 15 other habitations in Nathavaram Mandal in Visakhapatnam District and consequently direct the respondents not to deduct the labour cess from the bills payable to the petitioner without including the same as required to be included in terms of the Memo No.636/Reforms-A1 /2008 dated 08-06-2011. lA NO: 1 OF 2019 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 to direct the respondents not to deduct the labour cess from the bills of the petitioner in respect of Agreement No.142/2016-17, dt. 30.01.2017, in respect of work providing CPWS Scheme to Gannavaram and 15 other habitations in Nathavaram Mandal in Visakhapatnam District, pending disposal of the above said writ petition. Counsel for the Petitioner: SRI DEVI PRASAD MANGALAPURI Counsel for the Respondents: GP FOR PANCHAYAT RAJ & RURAL The Court made the following order: DEV APHC010035952019 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3329] MONDAY,THE TWENTY FIRST DAY OF JULY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 1639/2019 Between: 1.M/S. VELKO INFRATECH PROJECTS P L, H.NO.59-10-2, GAYATHRI NAGAR, VIJAYAWADA. ...PETITIONER AND GUNTUR 1.THE STATE OF, AP, SECRETERIAT, VELAGAPUDI, DISTRICT 2.ENGINEERINCHIEF, VASUDHA SHELTERS, 3RD FLOOR C BLOCK, NEAR Lie COLONY, SAIPURAM COLONY, GOLLAPUDI, VIJAYAWADA. 3.CHIEF ENGINEERII, VASUDHA TOWERS, 3RD FLOOR C BLOCK, NEAR Lie COLONY, SAIPURAM COLONY, GOLLAPUDI, VIJAYAWADA 4.SUPERITENDENT ENGINEER, APRWSSP, VISAKHAPATNAM, VISAKHAPATNAM DISTRICT 5. EXECUTIVE ENGINEER, VISAKHAPATNAM, VISAKHAPATNAM DISTRICT ...RESPONDENT(S): 0 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 toto 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 percent of the bills payable to the petitioner 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 agreement No 142/2016-17, dt.30.1.2017, in respect of work CPWS Scheme to Gannavaram and 15 other habitations in Nathavaram Mandal in Visakhapatnam District and consequently direct the respondents not to deduct the labour cess from the bills payable to the petitioner without including the same as required to be included in terms of the Memo No.636/Reforms-A1/2008 dated 08-06-2011 lA NO: 1 OF 2019 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 13 Authorities to reckon the unaided service of the petitioners with effect from w.e.f.12.6.1987, 1.9.1987, 12.6.1987, 12.6.1987 and 12.6.1987 to 1.4.1993 respectively for the purpose of Career Advancement Scheme and Automatic Advancement Scheme in pursuant to the Judgment rendered in W.P.No.3460 of 2010 and batch dated 23.08.2017 and revise the pay of the Writ Petitioners Counsel for the Petitioner: 1.DEVI PRASAD MANGALAPURI Counsel for the Respondent(S): 1.GP FOR PANCHAYAT RAJ RURAL DEV (AP) The Court made the following: THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 1639/2019 ORDER: Heard learned counsel for the petitioner and the learned counsel 1. appearing for the respondents. Perused the material available on record. The issue raised in the present writ petition is squarely covered by the 2. order, dated 20.09.2023 in W.P.No.16156 of 2020 & batch. Accordingly, this writ petition is disposed of with the same directions. 3. The Registry is directed to append the copy of the order, dated 4. 20.09.2023 in W.P.No.16156 of 2020 & batch to this order. There shall be no order as to costs. Miscellaneous petitions pending, if 5. any, in this case shall stand closed. Sd/- K. TATA RAO DEPUTY REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. The Principal Secretary, Panchayat Raj & Rural Develepment, Secretariat, Velagapudi, Amaravati, Guntur District The Engineer-in-Chief, RWS and Sanitation, A.P. Rural Water Supply & Sanitation (APRWSSP), vasudha shelters, 3rd floor C Block, Near LIC colony, saipuram colony, Gollapudi, Vijayawada-521 225. The Chief Engineer-ll, RWS and Sanitation, A.P. Rural Water Supply & Sanitation (APRWSSP), vasudha towers, 3rd floor C block, near LIC colony, Saipuram Colony, Gollapudi, Vijayawada-521 225. 2. 3. 4. The Superitending Engineer, RWS and Sanitation, Visakhapatnam, A.P. Rural Water Supply & Sanitation (APRWSSP), Visakhapatnam, Visakhapatnam District, A.P. State. 5. The Executive Engineer, Visakhapatnam District, A.P. State. 6. One CC to Sri Devi Prasad Mangalapuri, Advocate 7. Two CCs to GP for Panchayat Raj & Rural Dev, Pradesh [OUT] 8. Two CD Copies (Along with a copy of order dt. 20.09.2023 i RWS & S Division Visakhapatnam, [OPUC] High Court of Andhra in WP No. 16156 of 2020 & Batch) TF high court DATED:21/07/2025 ORDER WP NO. 1639 OF 2019 disposing of the w.p 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. 18550. 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 1. 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. 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 2. petitioners. 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 3. 2 WP No. 16156 of 2020 &, bS as claimed by the petitioners. It is submitted that as per norms of the Labour Cess @ 1% is provided in the payment to the contractor. contract, in Condition No.7.3.2 Schedule-A Part-II (B). While making the amount will be paid to the Labour and Labour Cess will be Department proportionately as per rules recovered from the bills of the contractors amount, but not from the that payment of Labour deduction from the bills the Government. amount kept in Schedule A- Part-II(B|. It is submitted Cess is the responsibility of the contractor and remittance to the board i ^ and IS the responsibility of 4. Heard learned counsel for Pleader for the respondents. the petitioners and learned Government 5. The workers in the construction held unregulated and are unorganized as well as are not governed by the intended for the benefit of workmen a view to take effective welfare various legislations that of various industries are and other sectors, measures for them, as like the other With regulated work force, the Parliament Construction Workers enacted the Building and and Conditions of aspects such as creation of other (Regulation of Employment Service) Act. 1996 (-1996 Act'for short). Various fund. registration of workers/beneficiari were provided for. Committees aries and issuance of identity cards are constituted at state and central levels to regulate the system and to see the welfare unorganised work force/labour in the civil construction measures to reach the sector. % ■ 3 NV.J WP No. 16156 of 2020 & batch For the purpose of pooling necessary resources and to augment finances to cany out the objectives under the 1996 Act, the Parliament 6. 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 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 construction or building work in the preceding twelve months. The 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 7. manner 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 WP No. 16156 of 2020 & batoh referable to the activity undertaken by the activity is undertaken. person or agency not the one for or on behalf of whom the 9. It is not disputed that this Court, held in a batch of writ Government by order dated 22.10.2009 petitions in W.P.Nos.l 1269 of 2009 earlier & batch that the cannot be permitted to deduct payments to the contractors and the the amount while making agency to deduct cess occasion for an under the Cess Act would arise only when the included in the work corresponding amount is estimates and conversely if the amount in the work estimates, deductions representing the cess is not included i while making cannot be made payments to the contractors. The above batch petitions were disposed of with the following directions: of writ (a) That the respondents shall include 1 % cess in * for the works which then estimates continues for or beuond n i ° if the work not deduct any amount towards corresponding amount is included in the (b) That the respondents shall cess, unless the estimates. 10. Assuming that there amount payable towards cannot be permitted to deduct that contractors. In affecting the levy existed any justification for their omission to include the in the work estimates, amount while making payments to the penalizing the contractor cess they a way, it would amount to either or contrary to the provisions of 1996 Act. any violation of 1996 Act The consequences that flow from directed towards must in fact be agency that has undertaken construction. Therefore, the 5 NV.J WP No. 16156 of 2020 & batch inescapable conclusion is that the occasion for cess under the Cess Act would an agency to deduct the 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. 11. In W.P.Nos. 11269 of 2009 86 batch dated 22.10.2009 and W.P.No.6090 of 2011 dated 11.04.2012, the High Court of Andhra Pradesh at Hyderabad observed that, the inaction on the part of the respondents i not refunding the amount already collected towards Labour Cess is held unsustainable and held that the petitioners were entitled for the amount recovered from them. in 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 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 85 batch “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 Seiwice) Act, 1996. In the said case, the case of contractors, in short, is that the company is a 12. was 6 NV,J WP N0.I6IS6 of 2020 &, batch factoiy established under Act of 1948 from the application of the contractors, under and is, therefore, expressly excluded provisions of Act No.27. According to any circumstances, factories of the covered by the provisions of Act of 1948, pay 1% cess under the companies are and are, therefore, not liable to provisions of Act No.28. The provisions contained in or other construction as blast furnace and, therefore, 1% cess or remit any such amount to provisions of the said Act. Act No.27, iin particular, the definition of “building cover the structures such they are not liable to either deduct work” would not the Government under the 13. On perusal of the above judgment, it is evident that the involved in the said question case was as to applicability of Labour Cess. But, in the was whether the petitioners are entitled or not, as such, the ratio laid down in cannot be applied to the present facts of the Pleader is rejected. present case, the question involved for such reduction in Labour Cess W.A.No.l012of2013& batch case, and the contention of the learned Government 14. Whether it is case of proposed deduction from the bills amounts already deducted, the any amount from the contractors a or the case of refund of the respondents have no right towards cess without first to recover including the same in the estimates and such deduction the bill amounts without there said amount in the estimates i towards cess from being any corresponding inclusion of the IS bad in law and the petitioners are certainly not liable for deduction from their bills. The action of the respondents in % ■ 7 NV.J WPNo.l6156of2020& batch proposing to deduct the Labour Cess @ 1% from the bills petitioners is therefore held unsustainable. payable to the 15. Whether it is case of proposed deduction from the bills or the case a of refund of the amounts already deducted, the respondents have no right cess without first to recover any amount from the contractors towards including the same in the estimates and such deduction towards the bill amounts without there being said amount in the estimates i cess from any corresponding inclusion of the 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 corresponding amount is included in the estimates, the respondents can deduct amount 1% towards Labour Cess. the as prescribed at the rate of b. Upon verification. if the respondents found corresponding amount is not included in the estimates, the respondent shall not take steps to deduct the the amount from the petitioners towards Labour that the amount/recover Cess. 17. Consequently, miscellaneous applications pending stand closed. if any, shall also JUSTICE VENKATESWARLU NIMMAGADDA Date:20.09.2023 SP