Industries not willing to pay building cess

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Cess is used for the welfare of labourers

Industries and business enterprises in the State, earning and investing in hundreds of crores of rupees, are not willing to increase their construction costs by the one percentage point which would go into providing security and welfare measures to the labourers who toil to build their empires.

Contribution of private enterprises to the Andhra Pradesh Building and Other Construction Workers' Welfare Fund created under the relevant provision of the State Act does not exceed five per cent of the total, inform officials from the Labour Department.

Few private establishments have voluntarily come forward to register with the A.P. Building and Other Construction Workers' Welfare Board.

Predominant majority

Of the 7,830 establishments registered under the Act, a predominant majority pertain to public utility works such as irrigation projects and roads taken up under relevant government departments. These registrations constitute but a fraction of the 2.3 lakh establishments identified State-wide in a detailed survey conducted by the Labour Department in 2007.

According to the rules framed under the A.P. Building and Other Construction Workers' Welfare Cess Act, one percent of the cost of any building or construction work (excluding land value) undertaken under these establishments in the previous 12 months should be credited to the fund by way of Building Cess.


Individual constructions with costs below Rs.10 lakh, and building and construction works which are already covered under the Mines Act and Factories Act are exempted from this.

However, hundreds of companies engaged or to be engaged in manufacturing business -- quite a few public sector enterprises in them -- have taken shelter under this provision and challenged the mandatory cess in the court of law. “Contention of many companies is that they are already registered under the Factories Act.

However, we have filed counters that the utilities should be brought under the Building Act till the construction is finished and production begins.

Writ petitions

Major companies such as Vizag Steel Plant, VTPS, KTPP and GMR too have filed writ petitions in High Court seeking exemption to their expansion activities,” Joint Commissioner of Labour R.Ravi Bhushan Rao informed.

Labour costs

Some other companies have contended that the cess should be collected only on the labour costs .

While there are over 300 writ petitions filed in the High Court challenging the cess, contractors engaged in the works of the SCR alone have filed 69 of them.



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