Labour cess on imported equipment

In one of the infrastructure project some imported machinery was procured and installed. Equipment was imported from Germany and customs and other duties were paid, only some testing and commissioning was done for this equipment in India.

Question is- whether labour cess@1% be applicable on this?

The contract has two payment portions, one for supply and one for service. If applicable, will the labour cess applicable on both or only on service portion or on none.

Asked 7 years ago in Business Law

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3 Answers

THE BUILDING AND OTHER CONSTRUCTION WORKERS’ WELFARE CESS ACT, 1996;

An act to provide for the levy and collection of a cess on the cost of construction

incurred by employers with a view to augmenting the resources of the Building

and Other Construction Workers’ Welfare Boards constituted under the Building

and Other Construction Workers (Regulation of Employment and Conditions

of Service) Act, 1996.

The provision to levy and collect cess is given in section 3 of the above referred act:

3 . Levy and collection of cess.—(1) There shall be levied and collected a cess

for the purposes of the Building and Other Construction Workers (Regulation of

Employment and Conditions of Service) Act, 1996, at such rate not exceeding two

per cent, but not less than one per cent, of the cost of construction incurred by

an employer, as the Central Government may, by notification in the Official Gazette,

from time to time specify.

(2) The cess levied under sub-section (1) shall be collected from every

employer in such manner and at such time, including deduction at source in relation

to a building or other construction work of a Government or of a public sector

undertaking or advance collection through a local authority where an approval of

such building or other construction work by such local authority is required, as may

be prescribed.

Thus, as per the provisions of law, the cess may be levied for the other construction namely service as mentioned by you.

T Kalaiselvan

Advocate, Vellore

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As per the THE BUILDING AND OTHER CONSTRUCTION WORKERS’ WELFARE CESS Act,1996 it isto An Act to provide for the levy and collection of a cess on the cost of construction incurred by employers with a view to augmenting the resources of the Building and Other Construction Workers’ Welfare Boards constituted under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and such cess is applicable only after completion of construction works.

In importing the machinery such cess is never applicable.

So challenge the imposition of such cess in Tax Tribunal or the high court .