In an order aimed at safeguarding the welfare and social security rights of thousands of construction workers, the Chamba Labour Department has directed JSW Energy to deposit an outstanding labour welfare cess of Rs 8.89 crore for its 240 MW Kutehr Hydroelectric Project on the Ravi river in Chamba district.
The assessment proceedings relating to the project have been completed by the labour officer-cum-assessing officer, Chamba Zone, under the Building and Other Construction Workers Welfare Cess Act, 1996.
Under the assessment, the company’s total labour welfare cess obligation has been fixed at Rs 18.56 crore. The company had already deposited Rs 9.67 crore based on a self-assessment. However, following a detailed scrutiny, the department determined that an additional Rs 8.89 crore remains payable and has directed the company to deposit the amount with the Cess Collector, Chamba Zone, within 30 days of the order.
The assessment authority took a strict view after the company allegedly failed to furnish adequate documents and an auditor’s certificate during the proceedings. During the assessment, the assessing officer conducted an internal scrutiny and cross-verified the company’s submissions with official records filed before the Haryana Electricity Regulatory Commission (HERC), which reflected the project’s total estimated cost at Rs 2,974.74 crore.
The 21-page order noted an apparent contradiction in the company’s position, stating that it had relied on the full project cost as the capital base before the regulatory commission to support power tariff calculations, while attempting to exclude GST and other components to reduce its labour welfare cess liability. The arguments were rejected by the assessing authority.
Citing various judgments of the Supreme Court of India and high courts, the order clarified that only specific heads such as land cost, pure supply contracts, compensation payments, pre-operative expenses, LADA contributions, finance charges and interest during construction (IDC) are eligible for exemption from cess calculations. The cess, it noted, remains fully applicable on actual civil construction and technical installation works.
After considering all legal and financial aspects, the department excluded Rs 1,117.85 crore under permissible exemption categories and fixed the net construction cost at Rs 1,856.89 crore. Applying the statutory cess rate of one per cent, the final labour welfare cess liability was assessed at Rs 18.56 crore.
Chamba District Labour Officer Anurag Sharma said the department remains committed to safeguarding the welfare of construction workers. He emphasised that no large construction company would be allowed to evade or overlook its statutory social security obligations and that JSW Energy must deposit the outstanding cess amount within the stipulated timeframe.
