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26. The Building and Other Construction Workers‟ Welfare Cess Rules, 1998 (for short, the BOCW Cess Rules, 1998) came into force on 26.03.1998. It was made in exercise of the power conferred by sub-section (1) of section 14 of the Cess Act, 1996. Rule 4 of the BOCW Cess Rules, 1998 is relevant and quoted below:

"4. Time and manner of collection--(1) The cess levied under sub-section (1) of section 3 of the Act shall be paid by an employer, within thirty days of completion of the M/s Sikkim Urja Ltd. (formerly Teesta Urja Limited) vs. M/s Abir Infrastructure Pvt. Ltd. & Ors.

GOS Circular dated 06.09.2010

30. On 06.09.2010, the Department of Labour, Government of Sikkim addressed a Circular to all Secretaries/Heads of Department of Government of Sikkim regarding implementation of the BOCW Act, 1996, the Cess Act, 1996 and their respective Rules. It stated that the State Government is required to implement the provisions of the BOCW Act, 1996, the Cess Act, 1996 and their respective Rules in view of the direction of the Hon‟ble Supreme Court passed in Writ Petition No. 318 of 2006, as already notified M/s Sikkim Urja Ltd. (formerly Teesta Urja Limited) vs. M/s Abir Infrastructure Pvt. Ltd. & Ors. in Sikkim Herald. It also specified that the cess was to be collected @ of 1% of the cost of construction incurred by an employer or any executing agency as the case may be. It clarified that as per Rule 5 of the BOCW Cess Rules, 1998, the proceeds of the cess collected under Rule 4 shall be transferred by such Government Office/Establishment as the case may be to the Building and Other Construction Welfare Board which has been constituted vide Notification No.13/DL dated 26.02.2010 and published in the Extraordinary Gazette No.64 dated 27.02.2010. All concerned were required to implement the said provision by deducting the cess from the cost of construction and forwarded to the Building and Other Construction Welfare Board. For the purpose of implementation of these Acts, list of all contractors/establishments registered with the concerned department including list of contractors/establishment executing different building and construction works were required to be forwarded to the Labour Department indicating the cost of construction of the work. The Circular further notified that in the event any contractor/establishment having submitted bill for payment in connection with execution of building and other construction work, 1% of the cost of construction is required to be deducted by the Department before the bills are M/s Sikkim Urja Ltd. (formerly Teesta Urja Limited) vs. M/s Abir Infrastructure Pvt. Ltd. & Ors. cleared, being the amount payable as cess in terms of the provision of Section 3 of the Cess Act, 1996 read with Rule 4 of the BOCW Cess Rules, 1998. It notified that henceforth all Works Department or any other Department/Establishment as the case may be while entering into any agreement with any Contractor/Establishment for execution of any building and other construction works including works being executed departmentally shall in compliance of the provisions of the BOCW Act, 1996 and the Cess Act, 1996 ensure deduction @ 1% of the cost of construction as cess.

34. In Dewan Chand Builders (supra), the Hon‟ble Supreme Court examined the judgment rendered by the High Court of Delhi in which it was held that the BOCW Act, 1996, the BOCW Rules, 1998, the Cess Act, 1996 and the BOCW Cess Rules, 1998 were constitutionally valid and within the competence of the Parliament as the levy was a fee referable to Schedule VII List 1 Entry 97 of the Constitution of India. While doing so, the Hon‟ble Supreme Court surveyed the relevant provisions of both the Acts and the Rules. The Hon‟ble Supreme Court was of the view that from the scheme of the BOCW Act, 1996 its sole aim is the welfare of building and construction workers, directly relatable to their constitutionally recognized right to live with basic human dignity, enshrined in Article 21 of the Constitution of India. It was held that it envisages a network of authorities at the Central and State Levels to ensure that M/s Sikkim Urja Ltd. (formerly Teesta Urja Limited) vs. M/s Abir Infrastructure Pvt. Ltd. & Ors. the benefit of the legislation is made available to every building and construction worker, by constituting welfare boards and clothing them with sufficient powers to ensure enforcement of the primary purpose of the BOCW Act, 1996. It was held that the means of generating revenues for making effective the welfare provisions of the BOCW Act, 1996 is through the Cess Act, 1996. The Hon‟ble Supreme Court held that it is manifest from the overarching schemes of the BOCW Act, 1996, the Cess Act, 1996 and the Rules made thereunder that the sole object is to regulate the employment and conditions of service of building and other construction workers, traditionally exploited section in the society and to provide for their safety, health and other welfare measures. It was held that the BOCW Act, 1996 and the Cess Act, 1996 break new ground in that, the liability to pay cess falls not only on the owner of the building or establishment, but under Section 2(1)(i)(iii) of the BOCW Act, 1996, the contractor as well. The extension of the liability on to the contractor is with a view to ensure that, if for any reason it is not possible to collect cess from the owner of the building at a stage subsequent to the completion of the construction, it can be recovered from the contractor. It was held that the Cess Act, 1996 and the BOCW Cess Rules, 1998 ensure that the cess is collected at source from the M/s Sikkim Urja Ltd. (formerly Teesta Urja Limited) vs. M/s Abir Infrastructure Pvt. Ltd. & Ors. bills of the contractors to whom payments are made by the owner. The Hon‟ble Supreme Court opined that the burden of cess is passed on from the owner to the contractor.

40. As noted earlier, the BOCW Act, 1996 and the Cess Act, 1996 has come into effect on 01.03.1996 and 03.11.1995 respectively, much prior to the date of submission of the price bids, i.e., 13.02.2007, by the respondents and the execution of the contract agreement dated 12.09.2007. Clause 17.4 including sub-clause (xv) thereof of the GCC clearly mandated that the respondents as the contractors shall abide at all times the labour laws including the BOCW Act, 1996 and the Cess Act, 1996. A reading of the definition of the words „contractor‟, „employer‟ and „establishment‟ as defined in section 2(g), 2(i) and 2(j) respectively in the BOCW Act, 1996, along with the Cess Act, 1996 and the Rules framed thereunder, it becomes clear that the respondents as contractors were liable to pay the cess. Section 3 of the Cess Act, 1996 imposed a liability upon the contractors to pay the cess. Therefore, the contractors were liable under section 3 of the Cess Act, 1996 from the date of enforcement. On 26.09.1996, the Government of India, Ministry of Labour notified the rate of cess @ 1% of the cost of construction incurred by an employer under the Cess Act, 1996. Thus, the respondents were liable to pay 1% of the cost of construction, w.e.f., from M/s Sikkim Urja Ltd. (formerly Teesta Urja Limited) vs. M/s Abir Infrastructure Pvt. Ltd. & Ors. the date of the contract agreement, i.e., 12.09.2007, as by then the BOCW Act, 1996, the Cess Act, 1996 as well as the rate of cess Notification dated 26.09.1996 had already been enforced. Rule 4 of the BOCW Cess Rules, 1998 which provides for time and manner of collection of cess when applied to the facts of this case, it is apparent that the respondents were liable to pay the cess within thirty days of completion of one year from the date of commencement of work and every year thereafter at the notified rates on the cost of construction incurred during the relevant period till the completion of the project in 2017.