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saswatabanerjeePlease ensure you give the full details of the circumstances. Have you read the BOCW act? If there is civil work being done, the act will most probably apply
From India, Mumbai
email@example.comYes sir, most are supply items cases but Civil works are also there for that I required for Applicability of BOCW ACT SIR.
From India, Faridabad
Brief on BOCW Act, 1996: & attachment of BOCW_Cess_FAQs
Before explaining the details of the BOCW Act and Rules, on the basis of various High Courts and Hon'ble Supreme Court judgments that Cess is not payable on the cost of supplies of equipment and machinery including their installation provided your fabrication work is not covered under any specific activity defined in Section 2(1)(d) of the BOCW Act 1996.
The provisions of the Act, Rules and judgments of the Hon'ble Courts on the subject as under:
Section 3(1) of the Cess Act prescribes that a Cess would be levyable @ not exceeding 2% but not less than 1% on the ‘cost of construction’. ‘Cost of Construction’ as given in Rule 3 of the Cess Rules is to include ‘all expenditure incurred by an employer in connection with the building or other construction work’ with the exclusion of i) cost of land, and ii) any compensation paid or payable to a worker or his kin under the Workmen’s Compensation Act, 1923. Section 2(d) of the Cess Rules states that any expression not defined in the Cess Rules would have the meaning assigned to such expression in the BOCW Act.
The term ‘Building or other construction work’, is defined in Section 2(1)(d) of the BOCW Act as under-
2(1)(d) “building or other construction work” means 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, telegraph and overseas communications, dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specific 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 (63 of 1948), or the Mines Act, 1952 (35 of 1952), apply."
In view of above provision it is clear that Cess is payable on the expenditure incurred on specific construction related activities. The construction works have been defined in detail in Section 2(d) of the BOCW Act as noted above. Other activities like equipment and machinery or other supplies are not subject to levy of Cess.
Following judgments are relevant to the case:
1. The High Court of Andhra Pradesh in "Cormandel Prestcrete Private Limited v. State of Andhra Pradesh and Ors." clearly held in 2008 that cess is to be collected only on the ‘cost of construction’ and not on the entire value of work, meaning that the total cost of work, would not be counted for cess valuation.
2. The Jharkhand High Court in the matter of "Abhijeet Hazaribagh Toll Road Limited v. Union of India and Ors" dealt with Section 3 of the Cess Act and Rule 3 of the Cess Rules and held in 2014 that ‘under no stretch of imagination, it can be said that the construction activity amount to sale/purchase of goods’.
3. The Hon'ble Supreme Court of India in the matter of "Lanco Anpara Power Limited v. State of Uttar Pradesh and Others." dealt with the term “building or other construction work” as defined under Section 2(1)(d) of the BOCW Act, and held as under:
Para No: 37- "We now advert to the core issue touching upon the construction of Section 2(1)(d) of the BOCW Act. The argument of the appellants is that the language thereof is unambiguous and literal construction is to be accorded to find the legislative intent. To our mind, this submission is of no avail. Section 2(1)(d) of the BOCW Act dealing with the building or construction work is in three parts. In the first part, different activities are mentioned which are to be covered by the said expression, namely, construction, alteration, repairs, maintenance or demolition.
Second part of the definition is aimed at those buildings or works in relation to which the aforesaid activities are carried out. The third part of the definition contains exclusion clause by stipulation that it does not include “any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), applies”.
The first and second parts of the definition as observed by the Hon’ble Supreme Court of India are relevant to the present query.
Keeping in view the above judgments and explanations it is clear that no Cess is payable on equipment and machinery including its installation as no construction activity of Section 2(d) is involved in it. The Employer has to accordingly enter into different contracts. In case of a Turnkey Contract, different agreements and contracts need to be made for different activities.
From India, Thane
saswatabanerjeeSince the civil work is done, you will have to register under BOWC
From India, Mumbai