Himachal Pradesh News
JSW Energy Ordered to Pay ₹8.89 Crore Additional Labour Welfare Cess for Chamba Hydropower Project
In a significant move aimed at protecting the welfare and social security rights of construction workers, the Chamba Labour Department has directed JSW Energy to deposit an additional labour welfare cess of ₹8.89 crore for its 240 MW Kutehr Hydroelectric Project located on the Ravi River in Himachal Pradesh’s Chamba district.
In a significant move aimed at protecting the welfare and social security rights of construction workers, the Chamba Labour Department has directed JSW Energy to deposit an additional labour welfare cess of ₹8.89 crore for its 240 MW Kutehr Hydroelectric Project located on the Ravi River in Himachal Pradesh’s Chamba district.
The order comes after the completion of assessment proceedings conducted under the Building and Other Construction Workers Welfare Cess Act, 1996, by the Labour Officer-cum-Assessing Officer of the Chamba Zone.
Total Labour Welfare Cess Liability Fixed at ₹18.56 Crore
According to the assessment order, JSW Energy’s total labour welfare cess liability has been calculated at ₹18.56 crore. The company had previously deposited ₹9.67 crore based on its own assessment of the project costs.
However, after a detailed examination of project-related records and financial documents, labour authorities concluded that an additional ₹8.89 crore remains payable. The company has been instructed to deposit the outstanding amount with the Cess Collector, Chamba Zone, within 30 days of the order.
Labour Department Scrutinised Project Cost Details
Officials said the assessment process involved a comprehensive review of the project’s financial records. The department reportedly took a strict stance after the company allegedly failed to submit certain supporting documents and an auditor’s certificate during the proceedings.
To verify the project’s actual cost, the assessing authority cross-checked the company’s submissions with records filed before the Haryana Electricity Regulatory Commission (HERC). These records indicated that the total estimated project cost stood at ₹2,974.74 crore.
Authority Rejects Company’s Arguments on Cess Calculation
The 21-page assessment order highlighted what it described as inconsistencies in the company’s position regarding project costs.
According to the order, JSW Energy relied on the project’s full capital cost while presenting tariff-related calculations before the regulatory commission. However, during the cess assessment process, the company reportedly sought to exclude GST and certain other components to reduce its labour welfare cess liability.
The assessing authority rejected these arguments, stating that the applicable legal provisions and judicial precedents did not support such exclusions.
What Costs Are Exempt from Labour Welfare Cess?
Referring to judgments of the Supreme Court and various High Courts, the order clarified that only specific expenditure heads qualify for exemption from cess calculations. These include:
- Land acquisition costs
- Pure supply contracts
- Compensation payments
- Pre-operative expenses
- Local Area Development Authority (LADA) contributions
- Finance charges
- Interest During Construction (IDC)
The authority noted that labour welfare cess remains applicable on civil construction activities and technical installation works carried out as part of the project.
Net Construction Cost Assessed at ₹1,856.89 Crore
After considering all eligible exemptions, the Labour Department excluded expenses worth ₹1,117.85 crore from the total project cost.
As a result, the net construction cost was determined to be ₹1,856.89 crore. Applying the statutory cess rate of 1%, authorities calculated the final labour welfare cess liability at ₹18.56 crore.
Labour Department Reaffirms Commitment to Workers’ Welfare
Speaking on the matter, Chamba District Labour Officer Anurag Sharma emphasized that the department remains committed to safeguarding the rights and welfare of construction workers.
He stated that no large infrastructure company would be allowed to overlook its statutory obligations related to workers’ social security benefits. The official reiterated that JSW Energy must deposit the outstanding cess amount within the stipulated timeline.
The development is being seen as an important enforcement action that reinforces compliance with labour welfare laws in large-scale infrastructure and energy projects across the country.
