9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (8) TMI 1323 - HC - Indian LawsLevy and collection of cess - Labor cess - deduction of TDS - case of Respondent is that the date of the operation of the Cess Act and the Cess Rules in Delhi was 1st January 2002 and consequently the subject contract was not subject to the Cess Act and the Cess Rules - HELD THAT - The Cess Act had statutory force and came into effect throughout India on 3rd November, 1995 and any circular or notice issued by any Government or any organization including the Appellant herein with respect to the date of its enforcement would have no meaning, inasmuch as, the Cess Act being a Central Act, the date of its enforceability could not be postponed or determined by any State Government or any other organization. Finally, the Arbitral Awards and the impugned Orders are erroneous for the reason that they failed to take into consideration the aspect that the Appellant was liable to deduct at source cess at the notified rate from the bills for building and other construction works of the Respondent contractors from the date the Cess Act came into force i.e. 3 rd November, 1995. Appeal allowed.
Issues Involved:
1. Validity and applicability of the Building and Other Construction Workers' Welfare Cess Act, 1996 (Cess Act) and the Building and Other Construction Workers' (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act) in Delhi. 2. Whether the contractor or the owner (DMRC) is liable to pay the labour cess. 3. Interpretation of the term "employer" under the BOCW Act. 4. Whether the Arbitral Tribunal's award was in contravention of the substantive law and public policy of India. 5. Jurisdiction of the Court under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) to set aside the Arbitral Tribunal's award. Detailed Analysis: 1. Validity and Applicability of the Cess Act and BOCW Act in Delhi: The Cess Act and BOCW Act were enacted to regulate and ensure the welfare of construction workers. The Cess Act came into force on 3rd November 1995, and the BOCW Act on 1st March 1996, throughout India. The Cess Rules were effective from 26th March 1998. The contention that these Acts were applicable in Delhi only from 2002 was erroneous. The High Court clarified that the Acts were operational in Delhi from their respective dates of enactment and not from the date of the Delhi Rules' enactment in 2002. The Madras High Court's decision in M.E.S. Builders' Association of India v. Union of India supported this view, stating that non-constitution of the Welfare Board by the State does not exempt the payment of cess. 2. Liability for Payment of Labour Cess: The core issue was whether the contractor or the owner (DMRC) was liable for the cess. The Arbitral Tribunal and the Single Judge had ruled in favor of the contractors, stating that the liability was on the owner. However, the High Court found this interpretation incorrect, emphasizing that the Acts clearly mandated the contractor to be responsible for the payment of the cess, as the contractor falls within the definition of "employer" under the BOCW Act. 3. Interpretation of "Employer" under the BOCW Act: The term "employer" under the BOCW Act includes the contractor in relation to a building or other construction work carried on by or through a contractor. The High Court highlighted that the definition is broad enough to include subcontractors. The decision in Gannon Dunkerley and Co. Ltd. v. State of Madhya Pradesh supported this view, confirming that contractors are liable for the cess. 4. Contravention of Substantive Law and Public Policy: The High Court found that the Arbitral Tribunal's award was contrary to the substantive provisions of law and public policy of India. The Supreme Court in Oil and Natural Gas Corporation Limited v. SAW Pipes Limited held that an award could be set aside if it is patently illegal or in contravention of the substantive law. The High Court concluded that the Arbitral Tribunal and the Single Judge erred in concluding that the Cess Act and BOCW Act came into force in Delhi in 2002, and their decisions were patently illegal. 5. Jurisdiction under Section 34 of the A&C Act: The High Court reiterated that under Section 34 of the A&C Act, an award that is patently illegal or contrary to the substantive law can be set aside. The Arbitral Tribunal's award was found to be in violation of the statutory provisions of the Cess Act and BOCW Act, thus falling within the ambit of Section 34 for being set aside. Conclusion: The High Court allowed the appeals, setting aside the orders of the Single Judge and the Arbitral Tribunal's awards. The Court directed the refund of the amounts deposited by DMRC, with any accrued interest. The judgment clarified the applicability of the Cess Act and BOCW Act in Delhi and affirmed the contractor's liability for the payment of labour cess, reinforcing the interpretation of "employer" under the BOCW Act.
|
