Hr , Ir & Admin
Sr Manager Hr
Hr Hd Of A Thermal Power Plant
There is a Judgment on the same. I have the case with me. Please give me ur mail id so that i can forward.
Existing Industrial Construction is to be covered under BOCW. Cess needs to be paid for existing industry also in case any new project is constructed.
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30th June 2010 From India, Delhi
I am an Administrative in charge working for a leading corporate of India under the construction division located in Andhra Pradesh. Would like to seek your expert opinion in the following.
We are company “ C “.Our group company “A” has got an EPC contract for about Rs.2500 Crs from customer “B”. This group Co. “A” has awarded the portion of execution of construction with materials and a portion of supply of brought out materials to us, for a value of Rs. 300 Crs. Our Contract from group co. is including materials also. Now the customer advised our group co. “A “ for compliance of BOCW Act and BOCW Cess Act. , Our group co. in turn has adviced us to comply the same.(Note: Our group co. is not doing any construction activities. They are taking care of engineering, supply of main items etc.)The entire execution is done by us and workmen also belongs to us.
Kindly advice the following:-
1. Whether the above acts are applicable either to us or to our group co.”A”.
2. If it is applicable whether the group co. is liable for the relevant provisions or we are liable.
3. On what component/amount we are liable to pay the cess ( both in the case of our liability or group co’s liability) i.e whether on the total CV or on the contract value after deducting supplies amount.
Note: Supplies amount means the amount to be claimed by us directly (other than the amount of execution)for the supply items procured for some special job.
Materials means all construction materials required for job like steel, bulk materials etc.
13th July 2010 From India, Kakinada
As per my understanding , following are the appropriate point wise answers to your queries:
1. Act applies to you if you have registered yourself as an employer under BOCW Act. There is no contractor/ subcontractor etc defined in BOCW. One who has registered as Employer in BOCW Act is laible to pay cess and comply to the Act.
2. As discussed in above point.
3. You should pay the interim amount of Cess on the Construction Cost only and not on supplies. However on completion of project , you are to get Assessment done from Assessing Authority and pay the differential Amount. Though there is no clarity on the same in Law as it says that Cess is applicable on all costs except Land & Compensation. However it doesn't make sense that you pay Cess on the supply material. Though many constrution companies have already appealed against the same in Courts but High Court's decision is still pending on the same.
So I suggest to get the final assessment done from Assessing authority and depositing interim cess amount on construction cost only.
( Email: )
14th July 2010 From India, Delhi
Essentially it is the liability on the Customer, that they have to deduct 1% on the bills payable and remit to the Govt. Generally, the customer would tend to pass it on to the Contractor (your Gr. company) as in your case. Ofcourse your Gr. company has passed it on to you.
Though BOCW defines the term 'contractor' which also includes a sub-contractor, when it comes to applicability of Cess, everyone (either the customer, contractor or sub-contractor) is the same as pointed by Jiwanjot. Any, one of you have to remit the labour cess to the Govt. Since the buck is passed on to you, you need to get registered as the 'Employer' and comply with BOCW Act and BOCW Cess Act for the component assigned to you.
I'd assume that your Gr. company has an agreement with customer and in turn you have an agreement with your Gr. company. i.e., You bill to your Gr. Company and your Gr. company inturn bills to the Customer. If so, you may want to ensure that you add 1% to your bills as Labour Cess component and your Gr. company does similarly to the Customer. This is considering that the agreement value between your Gr. company and customer and inturn with you is excluding taxes, duties, cess etc. If the value is inclusive of all taxes, duties etc., and missed out on adding the 1% cess, then your Gr. company has lost 1%. You may want to ensure that this is not passed on to you.
14th July 2010 From India, Hyderabad
14th August 2011 From India, Suri
kindly mail the copy of judgement to my mail id also
we have also received verbal instructions to deposit the cess and we are covered under factories act.
that judgment will be helpful for us to decide further course of action.
27th August 2012 From India, Chennai
25th February 2016 From India, Lucknow
May anyone help me for that is Labour Cess Applicable on Free issue Material provided by Principal Contractor. Company "A" Construct one factory from Company "B". Company "A" Provide Cement & Steel to Company "B" as Free Issue Material.The value of Free issue material also not included in BOQ as per our BOQ we raised properly bill on him regular basis and they deduct BOCW on work done. but in the final settlement they are saying that BOCW on free issue material also impose on Company "B".
Total Work Order Value - 71 Cr. (Excluded FIM)
Total Work done Value - 71 Cr. (Excluded FIM)
Total Labor Cess Deduct Value - 0.71 Cr. (Excluded FIM)
FIM Value - 47 Cr.
They are Deducting Rs. 0.47 Cr. BOCW on FIM
Is it Correct because that is not our cost of Construction.
25th August 2016 From India, Delhi
The deducted cess on FIM is correct. There is no ambiguity. Total cost of construction would be inclusive of 47 Crores if it was not supplied by A.
There is no exemption if cost of material is supplied by Client.
Only Cost of land and Compensation paid or to be paid to workers under WC Act can be deducted from Cess Amount.
The only impact would be on the cess amount. It would be less if client is able to procure material at less cost than contractor. So 1% charged on it would be lesser than if the material is bought through contractor.
But even in that case accessing officer can see through under invoicing or costing. Then they will ask for higher cess with appropriate higher cost charged for material.
I guess in this case your company is benefited with less cess.
14th August 2018 From India, Mumbai