IN THE HIGH COURT OF ANDHRA PRADESH AMARAVATI (Special Original Jurisdiction) MONDAY, THE THIRD DAY OF FEBRUARY TWO THOUSAND AND TWENTY FIVE PRESENT HON’BLE SRI JUSTICE TARLADA RAJASEKHAR RAO WRIT PETITION NO: 2440 OF 2025 Between: Bommineni Ramanjaneyulu, S/o. Venkata Narasimha Rao, Aged about 61 years, Special Class Contractor, D.No.5-349, NGO Colony, Ongole -523002 Prakasam District, A.P. ...PETITIONER AND 1. The State of AP, Rep. by its Principal Secretary, Panchayat Raj and Rural Development Department, Secretariat, Velagapudi, Guntur District, A.P. 2. The Engineer-in-Chief, Rural water supply and sanitation Department, Vasudha Shelters, 5th Floor, C Block, Near LIC Colony, Saipuram Colony, Gollapudi, Vijayawada -521 225. 3. The Chief Engineer-ll, Rural water supply and sanitation Department, Vasudha Shelters, 1st Floor, C Block, Near LIC Colony, Saipuram Colony, Gollapudi, Vijayawada -521 225. 4. The Superintending Engineer, Rural Water Supply and Sanitation Circle, Visakhapatnam, A.P. 5. The Executive Engineer, Rural water supply (P) and sanitation Division) Anakapalli, A.P. / ...RESPONDENTS Petition under Article 226 of the Constitution of India is filed 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 paid at the instance of respondentsi 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 thd Rules made there under in agreement No. /2023-24 dt.29-09-2023 in respect of Mandal wise Packing of works for Providing drinking water facilities through 100% FHTCs with 55 LPCD service level in 51 habitations of Rambilli mandal in Anakapalli District and consequently to direct the respondents not to deduct the labour cess from the bills payable to the petitioner in Agreement No, /2023-24 dt.29-09-2023 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 2025 Petition under Section 151 CPC is filed 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 Agreement No. No. /2023-24 dt.29-09- 2023 in respect of Mandal wise Packing of works for Providing drinking water facilities through 100% FHTCs with 55 LPCD service level in 51 habitations of Rambilli mandal in Anakapaili District pending dispose of the above Writ Petition. Counsel for the Petitioner: SRI P L NARASIMHA RAO Counsel for the Respondent No.1: GP FOR PANCHAYAT RAJ RURAL DEV Counsel for the Respondent Nos. 2 to 5: GP FOR IRRIGATION AND CAD The Court made the following: ORDER APHC010038502025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3330] MONDAY, THE THIRD DAY OF FEBRUARY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE TARLADA RAJASEKHAR RAO WRIT PETITION NO: 2440/2025 Between: Bommineni Ramanjaneyulu ...PETITIONER AND The State of AP and others ...RESPONDENT(S) Counsel for the Petitioner: 1.P L NARASIMHARAO Counsel for the Respondent(S): 1.GP FOR PANCHAYAT RAJ RURAL DEV The Court made the following order: w 2 THE HONOURABLE SRI JUSTICE TARLADA RAJASEKHAR RAO WRIT PETITION NO.2440 of 2025 ORDER: This writ petition is filed under Article 226 of the Constitution of India seeking the following relief: “...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 labourcess @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 thereunder in agreement No.-/2023-24 dt.29-09-2023 in respect of Mandal wise Packing of works for Providing drinking water facilities through 100% FHTCs with 55 LPCD service level In 51 habitations of Rambilli Mandal in Anakapalli District and consequently to direct the respondents not to deduct the labour cess from the bills payable to the petitioner and to pass such other order or orders as this Hon’ble Court may deems fit and proper in the circumstances of the case. ” Heard learned counsel for the petitioner and learned 2. Government Pleader for Panchayat Raj appearing on behalf of the respondents. The learned counsel for petitioner submits that the issue 3. involved in this writ petition is squarely covered by the common order dated 20.09.2023 passed by this Court in W.P.No.16156 of 2020 and batch. 3 r 4, Learned Government Pleader does not refute the said submission. 5. In view of the same, for the reasons alike in the aforesaid order, this Court is inclined to dispose of the writ petition in terms of W.P.No.16156 of 2020 and batch, dated 20.09.2023. Accordingly, the Writ Petition is disposed of. There shall be no 6. order as to costs. Registry is directed to attach a copy of the order dated 7. 20.09.2023 passed in W.P.No.16156 of 2020 and batch to this order. As a sequel, miscellaneous petitions pending, if any, shall stand closed. SOI- P.VINOD KUMAR ASSISTANT REGISTRAR //TRUE COPY// N OFFICER To, 1. The Principal Secretary, Panchayat Raj and Rural Development Department, Secretariat, Velagapudi, Guntur District, A.P. 2. The Engineer-in-Chief, Rural water supply and sanitation Department, Vasudha Shelters, 5th Floor, C Block, Near LIC Colony, Saipuram Colony, Gollapudi, Vijayawada -521 225. 3. The Chief Engineer-ll, Rural water supply and sanitation Department, Vasudha Shelters, 1st Floor, C Block, Near LIC Colony, Saipuram Colony, Gollapudi, Vijayawada -521 225. 4. The Superintending Engineer, Rural Water Supply and Sanitation Circle, Visakhapatnam, A.P. 5. The Executive Engineer, Rural water supply (P) and sanitation Division, Anakapalli, A.P. 6. One CC to Sri P L Narasimha Rao, Advocate [OPUC] 7. Two CCs to GP for Panchayat Raj Rural Dev, High Court of Andhra Pradesh. [OUT] 8. Three CD Copies (Along with a copy of order dt. 20.09.2023 In WP No. 16156 of 2020 & Batch) TF HIGH COURT DATED:03/02/2025 ORDER WP.No.2440 of 2025 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 2. 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. Respondents filed counter affidavit seeking to justify their action in 3. 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 &. balrh 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 but not from the amount kept in Schedule A- Part-11 (B). that payment of Labour Cess is the responsibility of the contractor and deduction from the bills and remittance to the board i the Government. contractors amount. It is submitted the responsibility of IS Heard learned counsel for the petitioners and learned Government Pleader for the respondents. 4. 5. The workers in the construction field are unorganized as well as unregulated and are not governed by the various legislations that intended for the benefit of workmen of various industries and other are 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 providedfor. Committeesare constitutedat 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 WP IVo.16156 of 2020 &. batch 6. For the purpose of pooling necessary resources and to augment 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 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 manner in which the cess is to be administered is provided for under the Act. The 7. 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. 8. 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 4 ■ a NV.J WP No. 16156 of 2020 fir. batch referable to the activity undertaken by the person or agency not the one for or on behalf of whom the activity is undertaken. 9. It is not 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 Government cannot be permitted to deduct the amount while making payments to the contractors and the occasion for an agency to deduct cess under the Cess Act would arise only when the corresponding amount is included in the work estimates and conversely if the amount representing the cess is not included in the work estimates, deductions cannot be made while making payments to the contractors. The above batch of writ 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 include the amount payable towards 10. cess in the work 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 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. 11. In W.P.Nos. 11269 of 2009 & 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 in 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. 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 12. 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 & 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 6 NV.J WP No. 16156 of 2020 fir. batch factoiy 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. 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. 13. 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 froni 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 14. 7 NV.J WP No.16156 of 2020 & batrfi proposing to deduct the Labour Cess @ 1% from the bills payable to the petitioners is therefore held unsustainable. 15. 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 entitled for deduction from the bills. 16. Therefore, the writ petitions disposed of with the following are 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