Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is levied @ 1% on the cost of construction incurred by an employer as per the provisions of Sections 3(1) and 3(3) of the Building and Other Construction Workers’ Welfare Cess Act, 1996 read with Notification No.S.O 2899 dated 26.9.1996.
The Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] levied and collected on the cost of construction incurred by employers.
In exercise of the power conferred under Section 14 of the Building and Other Construction Workers’ Welfare Cess Act, 1996, the Central Government has framed the Building and Other Construction Workers’ Welfare Cess Rules, 1998.
While the charging Section 3 of the Building and Other Construction Workers’ Welfare Cess Act, 1996 uses the expression, “cost of construction”, the same is explained in the Rules.
Thus, the charging Section as well as rule 3 ought to be read together homogenously to sub-serve the object of the enactment.
As per Rule 3 of the Building and Other Construction Workers’ Welfare Cess Rules, 1998, the “cost of construction” is an inclusive definition which includes all expenditure except
1) cost of land and
2) any compensation paid or payable to a worker or his kin under the Workmen's Compensation Act, 1923.
The Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is levied on the total cost of construction (i.e. the cost comprising of both the materials [supply] and the labour [service] portion). The definition of cost of construction as per the statute (as already discussed above) excludes only cost of land and any compensation paid or payable to worker or his kin under the Workmen’s Compensation Act, 1923.
The same has been upheld by the High Court of Madhya Pradesh, Jabalpur in the order dt. 3.5.2012 passed in relation to Writ Petitions vide No. WP-3956/2009 [M/s. Technical Associates Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-14029/2009 [M/s. Star Delta Transformers Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-7303/2011 [M/s. G. V. P. R. Engineers Limited vs State of Madhya Pradesh and others]; No. WP-3226/2010 [Rohini Industrial Electricals Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-9871/2010 [M/s. Easun Reyiolle Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-15906/2011 [M/s. K. E. I. Industries Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-5173/2011 [M/s. Bajaj Electrical Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-2893/2012 [M/s. Eltel Engineers (JV) vs The Assistant Labour Commissioner, Jabalpur, and others] where the Hon’ble Court has stated that
“The cost of construction cannot be divided in parts, as argued by the petitioners, into supply portion and erection portion. Even the cost for supply portion is incurred by the petitioners and cannot be separated from the total cost incurred…”
The exception clauses relating to cost of construction as provided in Section 3 of Building and Other Construction Workers’ Welfare Cess Act, 1996 and Rule 3 of the Building and Other Construction Workers’ Welfare Cess Rules, 1998 clearly indicate that there was no intention of the statute to exclude the cost of supply part.
Thus, the Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is applicable on the total contract price and thus such cess is levied on both the materials [supply] and the labour [service] portion.
This has also been upheld by the High Court of Madhya Pradesh, Jabalpur in the order dt. 3.5.2012 passed in relation to Writ Petitions vide No. WP-3956/2009 [M/s. Technical Associates Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-14029/2009 [M/s. Star Delta Transformers Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-7303/2011 [M/s. G. V. P. R. Engineers Limited vs State of Madhya Pradesh and others]; No. WP-3226/2010 [Rohini Industrial Electricals Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-9871/2010 [M/s. Easun Reyiolle Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-15906/2011 [M/s. K. E. I. Industries Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-5173/2011 [M/s. Bajaj Electrical Limited vs The Assistant Labour Commissioner, Jabalpur, and others]; No. WP-2893/2012 [M/s. Eltel Engineers (JV) vs The Assistant Labour Commissioner, Jabalpur, and others]
As per the provisions of Section 3(2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is levied and collected in two ways:
1) By way of deduction at source by Government and PSU, from the cost of construction.
2) As an advance collection through a local authority where an approval of such building or other construction works by such local authority is required.
As per the provisions of the Building and Other Construction Workers’ Welfare Cess Act, 1996 read with the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, all the Govt. Departments are required to collect Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] for building & other construction works of establishments from employer-contractors.
Rule 4 of the Building and Other Construction Workers’ Welfare Cess Rules, 1998 makes it mandatory for deduction of cess payable at the notified rates (i.e. @1% as discussed above) from the bills paid for the building and other construction work of a government or a public sector undertaking.
The procedural parts of such deduction are guided by the provisions of the West Bengal Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Rules, 2004.
Yes. Such government office of Public Sector Undertaking may deduct from the cess collected, actual collection expenses not exceeding one per cent, of the total amount collected by them.
Yes. The amount collected shall be transferred to the Board within thirty days of its collection.
The levy and collection of Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is applicable on all buildings or other construction works except on those buildings or other construction works to which the provisions of the Factories Act, 1948, or the Mines Act, 1952, apply, vide the provisions of Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996 read with Section 2(1)(d) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.
However, the Central Government may, by notification in the Official Gazette, exempt any employer or class of employers in a State from the payment of cess payable under this Act where such cess is already levied and payable under any corresponding law in force in that State.