UTTAR PRADESH POWER TRANSMISSION CORPORATION LTD. AND ANR. versus CG POWER AND INDUSTRIAL SOLUTIONS LIMITED AND ANR.

UTTAR PRADESH POWER TRANSMISSION CORPORATION LTD. AND ANR. versus CG POWER AND INDUSTRIAL SOLUTIONS LIMITED AND ANR.

UPPTCL had no power under the contract or under the Cess Act and Rules to realize labour cess on the Supply Contract by withholding payments under other contracts or by invoking/encashing performance bank guarantees in the absence of assessment and levy under the Cess Act; a supply-only contract falls outside the statutory ambit of the BOCW Act/Cess Act for levy of cess, and recovery must follow the statutory mode; accordingly the High Court correctly set aside the UPPTCL communications and the Special Leave Petition is dismissed.

Parties
Appellant/petitioner: Uttar Pradesh Power Transmission Corporation Ltd.; Respondent: CG Power and Industrial Solutions Limited (formerly Crompton Greaves Ltd.); Respondent: Corporation Bank
Jurisdiction
India
Judgment Date
12 May 2021
Procedural Posture
Special Leave Petition Under Article 136 (slp (c) No. 8630 of 2020) / Final Judgment/dismissal of SLP Upholding High Court Order
Outcome
Special Leave Petition dismissed
Legal Topics
Cess, Writ Jurisdiction Under Article 226, Interpretation of BOCW Act and Cess Act, Recovery of Statutory Dues, Arbitration Clause and Alternate Remedies
Labour Law Administrative Law Constitutional Law Contract Law Tax/statutory Levy Law Cess Writ Jurisdiction Under Article 226 Interpretation of BOCW Act and Cess Act +2 more

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Parties

Uttar Pradesh Power Transmission Corporation Ltd.

Appellant/petitioner

CG Power and Industrial Solutions Limited (formerly Crompton Greaves Ltd.)

Respondent

Corporation Bank

Respondent

Procedural Posture

Special Leave Petition Under Article 136 (slp (c) No. 8630 of 2020) / Final Judgment/dismissal of SLP Upholding High Court Order

Legal Issues

  1. 1 Whether labour cess under the Building and Other Construction Workers’ Welfare Cess Act, 1996 is leviable on a pure supply contract
  2. 2 Whether UPPTCL could recover alleged outstanding cess by withholding payments under other contracts or by encashing performance bank guarantees absent assessment and levy under the Cess Act and Rules
  3. 3 Whether a writ under Article 226 was maintainable despite existence of arbitration clause/alternative remedies

Ratio Decidendi

UPPTCL had no power under the contract or under the Cess Act and Rules to realize labour cess on the Supply Contract by withholding payments under other contracts or by invoking/encashing performance bank guarantees in the absence of assessment and levy under the Cess Act; a supply-only contract falls outside the statutory ambit of the BOCW Act/Cess Act for levy of cess, and recovery must follow the statutory mode; accordingly the High Court correctly set aside the UPPTCL communications and the Special Leave Petition is dismissed.

Court Disposition

Special Leave Petition dismissed

Orders

  • Letters dated 2 September 2016 and 29 December 2018 issued by UPPTCL set aside/quashed
  • Impugned communications for recovery of labour cess in respect of the Supply Contract quashed