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Authority: High Court of Jammu & Kashmir and Ladakh at Srinagar\

Order Date: 08.09.2026\

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Case Overview\

  • Petitioners: R.G. Buildwell Engineers Ltd and Valeecha Engineering Ltd (appellants/petitioners).\
  • Respondents: Union of India and others, represented by the Director General of State Insurance (DSGI) and Additional Advocate General.\
  • Petitions: OWP No.1599/2013 and OWP No.61/2014 filed seeking a declaration that the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW Act), the Building and Other Construction Workers Welfare Cess Act, 1996 (Cess Act), and the Building and Other Construction Workers Welfare Cess Rules, 1998 are ultra‑vires the Constitution of India and therefore void.\
  • Background: The petitioners hold contracts with the J&K Economic Reconstruction Agency (respondent No.4). After 2012, a 1% cess was deducted from their bills under the Cess Act. They argue the levy is a tax, not a fee, and that Parliament lacked competence to legislate for the erstwhile State of Jammu & Kashmir because of Article 370 and the modified Entry 97 of List I.\
  • The petitioners raised several grounds: (i) levy is a tax; (ii) Parliament lacked legislative competence under Entry 97; (iii) the levy infringes the State’s constitutional autonomy; (iv) the Board was constituted only after the contracts were awarded, making the deduction unlawful.\
  • Respondents contended that the legislation falls within Entries 23 and 24 of the Concurrent List (and Entry 47), that the cess is a fee, and that the contracts contain an arbitration clause for disputes.\
  • The Court identified three questions for determination: (1) whether the levy is a tax or a fee; (2) whether Parliament had competence to enact the Acts for Jammu & Kashmir; (3) whether the Supreme Court’s decision in Dewan Chand Builders precludes re‑examining the competence issue.\
  • The Court noted that the Supreme Court in Dewan Chand Builders held the levy to be a fee, not a tax, and that this precedent is binding.\
  • The Court examined constitutional provisions (Articles 245, 246, 248, and the modified Entry 97) and concluded that Parliament’s power to legislate under Entries 23 and 24 of the Concurrent List is sufficient, rendering the Acts intra‑vires.\
  • The Court also considered the necessity of the Welfare Board’s constitution (vide SRO 274/2007 dated 31.07.2007) as a pre‑condition for levying the cess.\

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Final Outcome\

1. The Parliament had legislative competence to enact both the BOCW Act and the Cess Act for the erstwhile State of Jammu & Kashmir; the Acts are intra‑vires.\

2. The petitioners are liable to pay the 1% cess on all contracts awarded after 31 July 2007 (the date the J&K Building and Other Construction Workers Welfare Board was constituted).\

3. The Building and Other Construction Workers Welfare Cess Rules, 1998 are upheld as constitutionally valid.\

4. The cess amount due shall be recovered with interest at 6% per annum from the date it became payable until actual recovery.\

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Topics: Constitutional Validity, Labour Welfare Cess, Legislative Competence\