Yes. According to the definition of “establishment” as per Sec. 2(j) of the Building & Other Construction Workers’ (Regulation of Employment & Condition of Service) Act, 1996, the mother Act – “establishment” does not include an individual who employs such workers in any building or contraction work in relation to his own residence where the total cost of such construction not being more than rupees ten lakhs.

As per the provisions of Section 3(2) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, an employer may pay advance Cess on the basis of estimated cost of construction along with notice of commencement of work.

If the construction exceeds one year the final Cess payment is to be made after the total completion of work.

Yes. The liability to pay Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] falls not only on the owner of a building or establishment, but on the contractor also under specific conditions.

Under the provisions of Section 2(1)(i)(iii) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, the contractor is Employer, i.e. the person responsible to pay Building & Other Construction Workers’ Welfare Cess [BOCWW Cess], in relation to a building or other construction work carried on by or through a contractor, or by the employment of building workers supplied by a contractor.

In this context, the Hon’ble Supreme Court in the case Dewan Chand Builders and Contractors [(2012) 1 SCC 101], has mentioned that “The extension of the liability on to the contractor is with a view to ensure that, if for any reason it is not possible to collect Cess from the owner of the building at a stage subsequent to the completion of the construction, it can be recovered from the contractor. The Cess Act and the Cess Rules ensure that the Cess is collected at source from the bills of the contractors to whom payments are made by the owner. In short, the burden of Cess is passed on from the owner to the contractor.”

As per Section 2(1)(g) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 read with Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, the term “contractor” means a person who undertakes to produce a given result for any establishment, other than a mere supply of goods or articles of manufacture, by the employment of building workers or who supplies building workers for any work of the establishment, and includes a sub-contractor.

Thus, it is needless to say, that the scope of liability to pay Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] extends to not only a contractor but also to a sub-contractor.

As per Section 2(1)(a)(iii) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 read with Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, the term “appropriate Government” means in relation to any other establishment which employs building workers either directly or through a contractor, the Government of the State in which that other establishment is situated.

Thus, the Government of a State is also a stakeholder in implementation of this statute.

Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is levied on the cost of construction incurred by the employers on the building and other construction works.

As per Section 2(1)(d) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 read with Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, the term “building or other construction work” has a very wide coverage.

It includes the construction, alteration, repairs, maintenance or demolition of or, in relation to, buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission and distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio; television, telephone, telegraph and overseas communication dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aquaducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the appropriate Government, by notification but does not include any building or other construction work to which the provisions of the Factories Act, 1948, or the Mines Act, 1952, apply.

As per Section 2(1)(i) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 read with Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, an “employer” in relation to an establishment, means the owner thereof, and includes,—

1) in relation to a building or other construction work carried on by or under the authority of any department of the Government, directly without any contractor, the authority specified in this behalf, or where no authority is specified, the head of the department;

2) in relation to a building or other construction work carried on by or on behalf of a local authority or other establishment, directly without any contractor, the chief executive officer of that authority or establishment;

3) in relation to a building or other construction work carried on by or through a contractor, or by the employment of building workers supplied by a contractor, the contractor.

As per Section 2(1)(j) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 read with Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, an “establishment” means any establishment belonging to, or under the control of, Government, any body-corporate or firm, an individual or association or other body of individuals which or who employs building workers in any building or other construction work; and includes an establishment belonging to a contractor, but does not include an individual who employs such workers in any building or contraction work in relation to his own residence the total cost of such construction not being more than rupees ten lakhs.

1) PWD, G/WB undertakes the renovation of the offices building of the Directorate of Commercial Taxes and engages a contractor M/s X to do the same.

2) Housing Dept, G/WB engages a contractor to construct residential buildings to be handed over to applicants in lease.

3) I&W Dept, G/WB undertakes an extensive area development project of digging of new irrigation canals, constructing embankments on the river and digging of water-bodies.

4) NH Division of PW (Roads), G/WB undertakes the project of extension of the existing Highway and addition of multi-lanes therein.

5) Health Dept, G/WB makes necessary alterations in an indoor stadium to convert it into a quarantine centre to fight pandemic.

6) P&RD Dept, G/WB constructs a new bridge thus connecting two blocks across the river.

7) Education Dept, G/WB completes the project of interior decoration of its District offices

8) PHE Dept, G/WB undertakes a project for supply of safe drinking water based on Surface Water.

Now, when the payments will be made to the beneficiaries for such work done, will Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] be deducted on the Bill amount?

ans:

As already discussed above, as per Section 2(1)(d) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 read with Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996, the term “building or other construction work” has a very wide coverage.

It includes activities like

1) construction,

2) alteration,

3) repairs,

4) maintenance and even

5) demolition

of or, in relation to, a wide area of works like:

buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission and distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio; television, telephone, telegraph and overseas communication dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aquaducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the appropriate Government, by notification.

The only area of exclusion is any building or other construction work to which the provisions of the Factories Act, 1948, or the Mines Act, 1952, apply.

It may be stated that the term “of” as well as “in relation to” has a very wide range of meaning.

The Hon’ble Supreme Court has thrown some light on the meaning of the word “in relation to” and opined that the term “in relation to” is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as indirect significance depending on the context.

In Doypack Systems Pvt. Ltd. vs. Union of India and Ors. [1988 AIR 782, 1988 SCR (2) 962] the Court has observed: "The expressions 'pertaining to', 'in relation to' and 'arising out of', used in the deeming provision, are used in the expansive sense. The expression 'arising out of' has been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur Undertaking. The words "pertaining to" and "in relation to" have the same wide meaning and have been used interchangeably for among other reasons, which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word 'pertain' is synonymous with the word 'relate'. The term 'relate' is also defined as meaning to bring into association or connection with. The expression 'in relation to' (so also 'pertaining to'), is a very broad expression which presupposes another subject matter. These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context."

In Home Solution Retail India Ltd vs. UOI & Ors [2009(237) ELT 209 (Del.)], the Court has observed: “The phrase ‘in relation to’ has been construed by this Court to be of the widest amplitude.”

Thus it may appear that the terms “in relation to” are subject to interpretations.

But, in the given cases (i – vii) all the activities and the areas of such work appear to be explicitly covered by the given definition of building or other construction as per Section 2(1)(d) of the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 read with Section 2(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996.

Thus, in absence of anything to the contrary at this instance, it appears that Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is required to be deducted by the DDO while making payments to the beneficiaries in all the above cases.

As it has already been discussed, the term “building or other construction work” has a very large ambit covering almost every area of supply where both goods and services are involved simultaneously.

As evident from the nature of such work, the payments for any such work when undertaken by the Govt. is made through the IFMS e-billing module.

The same should be done in these cases too where deduction of Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is involved.