Facing a Huge Labour Cess Demand for Our Power Plant Project – Is It Really Necessary?

Dear Friends,

We are setting up a 4x300 MW Power Plant in Maharashtra. Our factory drawings are approved, but we have not yet obtained the Factory License as our plant is still in the project stage.

We have received a notice from the Labour Department regarding the payment of a 1% Labour Cess on Plant Construction Cost, which amounts to crores of rupees. Although we are following The Factory Act rules and regulations, our ALC is stating that we have to pay the Labour Cess as we have not yet received the labour license.

My question is, do we need to pay any Labour Cess? Is it applicable to us?

I request your opinion, please.

Warm Regards,
Dharmesh

This is not a matter of the Factory Act; it comes under the purview of the BOCW Act, 1996. According to this act, 1% as cess has to be paid on the total project cost, excluding the cost of land.