Dear Nobendu-Nath, Cess under the BOCW Act is payable at one percent on the 'cost of construction' incurred by an employer. 'Cost of Construction' means all expenditure incurred by an employer in connection with the building or other construction work, which excludes i) cost of land, and ii) any compensation paid or payable under the EC Act, 1923.
Now, this Cess is payable to, or collected by, the State Board under this Act. Every State Board has its own procedure and rules for the assessment and collection of it. The employer has to furnish a return to the concerned assessment officer or authority, and that officer or authority is obliged to make an assessment of the amount of cess payable by the employer.
Some States make the assessment at the beginning of the project when you apply for IOD. Some States have laid down the procedure to collect it on the basis of labor billing by the contractors and make the assessment at the end of the project. Somewhere, the project cost is calculated on the basis of the area of the plot and index value per square meter.
There are a number of judicial interventions as to the interpretation of 'cost of construction' and whether the cost of supply component, ancillary activities, procurement of equipment and machinery, etc., are included in it or not. You need to approach the concerned authority in your area and understand from them. There is a huge level of corruption in every State. NAMO's corruption-free India is only on paper. Only NAMO being honest will not make India corruption-free.
If you want my view, then I will say that cess is levied on the 'cost of construction,' which should be restricted to 'building or other construction work.' What is 'building or other construction work' is well defined in Section 2(1)(d) of the BOCW Act, in which ancillary activities such as the supply/procurement of equipment and machinery are not included. Therefore, in my view, cess should be restricted to specific construction-related activities, and activities beyond this scope, i.e., the supply of equipment and ancillary activities, should not attract the provisions of the Cess Act and Cess Rules in relation to the levy of cess.