It is needless to say that any payment made by a WB Govt. Dept. to any beneficiary is done by raising a Bill in the appropriate TR Form in the e-billing module of IFMS.

The respective DDO enters the applicable data pertaining to the respective Bill amount payable to the beneficiary with inputs of all applicable deductions (e.g. IT-TDS, GST-TDS, Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] etc) and uploads the Bill in the IFMS e-billing module.

The Bill then flows to the Treasury and upon approval; the payment (after all deductions) gets credited to the beneficiary. The transfer of the Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] so deducted to the appropriate Account is done by the system itself.

The said fund is set apart and appropriated specifically for the performance of specified purpose. It is not merged in the tax or non-tax revenues but gets appropriated to a Public account.

No. Currently, there is no system check for the deduction of this Cess. Hence, deduction of this Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] currently remains as the prerogative of the DDO. In case of any error on the part of the DDO, even when inadvertent in nature, a Bill for payment to a contractor in relation to such construction works may get approved without deduction of Building & Other Construction Workers’ Welfare Cess [BOCWW Cess].

No. Section 4 of The Building and Other Construction Workers’ Welfare Cess Act, 1996 requires “every employer” to file returns in the manner prescribed.

As already discussed above, 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” mostly means a contractor, so far the works undertaken by WB Govt.

As already discussed above an “employer” as defined in Section 2(1)(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, 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, means the contractor.

Again, 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.

Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is a means to provide health and welfare measures for the workers engaged in building and other construction works. It is levied for building & other construction works of all establishments except on those buildings or other construction works to which the provisions of the Factories Act, 1948, or the Mines Act, 1952 are applicable.

As per Section 2(l) of the Factories Act, 1948, "worker" means a person employed in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any kind of work incidental to or connected with, the manufacturing process, or the subject of the manufacturing process.

As under Section 2(k) of the Factories Act, 1948, "Manufacturing process" includes the following:

1) Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal.

2) Pumping oil, water, sewage or any other substance.

3) Generating, transforming or transmitting power.

4) Composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding.

5) Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels.

6) Preserving or storing any article in cold storage.

In view of the above, it is inferred that the term "worker" under the Factories Act, 1948, does not involve a person involved in the construction of buildings. Also, the term "manufacturing process" does not involve any process for construction of buildings. Hence, the Factories Act covers only those workers who are engaged in the manufacturing process or any work that is incidental to the manufacturing process, and not workers who are involved in building and construction works.

The fact that construction workers are not covered under the Factories Act, 1948, and are therefore entitled to welfare measures under the Building and Other Construction Workers’ Welfare Cess Act, 1996 was put forth in the case of Lanco Anpara Power Ltd. V. State Of Uttar Pradesh & Others dated Oct. 10, 2016.

The petitioner construction companies, which are engaged in construction activities, argued that once the undertaking or the establishment had obtained a license for registration under the Factories Act, the Building and Other Construction Workers’ Welfare Cess Act, 1996 was not applicable on account of the exclusion under Section 2(1)(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996.

The issue before the Supreme Court was whether the Building and Other Construction Workers’ Welfare Cess Act, 1996 was applicable to those premises that are registered under the Factories Act, 1948.

The Court held that the establishments/premises registered under the Factories Act, 1948, employing construction workers in the construction of factory premises were not excluded from the application of the Building and Other Construction Workers’ Welfare Cess Act, 1996 in terms of the exclusion clause. The Court reasoned that an establishment/premise would become a factory under Section 2(m) of the Factories Act only when the manufacturing process as defined under Section 2(k) of the Factories Act commenced.

Consequently, the provisions of the Factories Act would apply only when the manufacturing process commences, and even upon commencement of the manufacturing activity, it only covered those workers who are engaged in such manufacturing activity under the Factories Act and not construction workers.

Hence, construction activities which are carried out in relation to establishments/registered premises /licensed under the Factories Act, 1948, would not attract the exclusion clause of the Building and Other Construction Workers’ Welfare Cess Act, 1996 by itself. Workers carrying on such activities would be covered under the Building and Other Construction Workers’ Welfare Cess Act, 1996.

The deductions of Income Tax deducted at source, GST deducted at source & Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] are not mutually exclusive in nature. In case, the said deductions are required to be made on any Bill depending on the conditions as laid down in the respective statutes, all such deductions have to be made on the single Bill.

As per the provisions of Section 15(2)(a) of the Central Goods & Services Tax Act/State Goods & Services Tax Act, 2017, the value of a supply of goods or services or both includes any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier.

This means that while determining the value of supply on which GST is levied, all taxes, duties, cesses, fees and charges levied under any law for the time being in force other than GST & GST compensation cess, if charged separately, are to be taken into account.

Now, Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is actually not separately charged but is a deduction that is made on the Bill value. So, by default, the Bill value without the GST will automatically be inclusive of this amount to be deducted as Building & Other Construction Workers’ Welfare Cess [BOCWW Cess]. This means GST is charged on Building & Other Construction Workers’ Welfare Cess [BOCWW Cess].

As per the explanation provided to Section 51(1) of the Central Goods & Services Tax Act/State Goods & Services Tax Act, 2017, for the purpose of TDS under GST, the value of supply is to be taken as the amount excluding the components of GST and GST cess indicated in the invoice.

Thus, TDS under GST is be deducted on a Bill only after excluding the GST components (including GST cess) and not on the value after deduction of the Building & Other Construction Workers’ Welfare Cess [BOCWW Cess].

Yes. An Assessing Officer, shall impose a penalty upto such amount of cess which an employer :

1) has not paid within the date as specified in the assessment order

2) has less paid, including

✓ the cess deducted at source or

✓ paid in advance

Under the BOCWW Act & Rules, the employer is responsible for non-deduction/short deduction of cess.

If the DDO is also an employer by nature, as provisions of 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, already discussed above, he will also stand responsible.

However, if the DDO is only making a payment to the contractor, he has no such liability to pay any penalty for non-deduction/short deduction of cess.