Building & Other Construction Workers’ Welfare Cess [BOCWW Cess] is a means to provide health and welfare measures for the workers engaged in building and other construction works. It is levied for building & other construction works of all establishments except on those buildings or other construction works to which the provisions of the Factories Act, 1948, or the Mines Act, 1952 are applicable.
As per Section 2(l) of the Factories Act, 1948, "worker" means a person employed in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any kind of work incidental to or connected with, the manufacturing process, or the subject of the manufacturing process.
As under Section 2(k) of the Factories Act, 1948, "Manufacturing process" includes the following:
i) Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal.
ii) Pumping oil, water, sewage or any other substance.
iii) Generating, transforming or transmitting power.
iv) Composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding.
v) Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels.
vi) Preserving or storing any article in cold storage.
In view of the above, it is inferred that the term "worker" under the Factories Act, 1948, does not involve a person involved in the construction of buildings. Also, the term "manufacturing process" does not involve any process for construction of buildings. Hence, the Factories Act covers only those workers who are engaged in the manufacturing process or any work that is incidental to the manufacturing process, and not workers who are involved in building and construction works.
The fact that construction workers are not covered under the Factories Act, 1948, and are therefore entitled to welfare measures under the Building and Other Construction Workers’ Welfare Cess Act, 1996 was put forth in the case of Lanco Anpara Power Ltd. V. State Of Uttar Pradesh & Others dated Oct. 10, 2016.
The petitioner construction companies, which are engaged in construction activities, argued that once the undertaking or the establishment had obtained a license for registration under the Factories Act, the Building and Other Construction Workers’ Welfare Cess Act, 1996 was not applicable on account of the exclusion under Section 2(1)(d) of the Building and Other Construction Workers’ Welfare Cess Act, 1996.
The issue before the Supreme Court was whether the Building and Other Construction Workers’ Welfare Cess Act, 1996 was applicable to those premises that are registered under the Factories Act, 1948.
The Court held that the establishments/premises registered under the Factories Act, 1948, employing construction workers in the construction of factory premises were not excluded from the application of the Building and Other Construction Workers’ Welfare Cess Act, 1996 in terms of the exclusion clause. The Court reasoned that an establishment/premise would become a factory under Section 2(m) of the Factories Act only when the manufacturing process as defined under Section 2(k) of the Factories Act commenced.
Consequently, the provisions of the Factories Act would apply only when the manufacturing process commences, and even upon commencement of the manufacturing activity, it only covered those workers who are engaged in such manufacturing activity under the Factories Act and not construction workers.
Hence, construction activities which are carried out in relation to establishments/registered premises /licensed under the Factories Act, 1948, would not attract the exclusion clause of the Building and Other Construction Workers’ Welfare Cess Act, 1996 by itself. Workers carrying on such activities would be covered under the Building and Other Construction Workers’ Welfare Cess Act, 1996.