Unspent balances on account of labour cess increased to Rs 622 cr
*Registrations made without obtaining valid certificates
Mohinder Verma
JAMMU, Apr 30: The Comptroller and Auditor General of India has put the Labour and Employment Department of the Union Territory of Jammu and Kashmir in the dock for poor implementation of Building and Other Construction Works (Regulation of Employment and Condition of Services) Act of 1996. Moreover, it has noticed increase in unspent balances on account of labour Cess from Rs 296 crore to Rs 622 crore during the five year period ended in March 2020 and registrations without obtaining valid certificates.
The Ministry of Labour and Employment, Government of India enacted Building and Other Construction Works (Regulation of Employment and Condition of Services) Act in the year 1996 and in order to address the issues concerning safety, health and welfare of workers employed in construction sector, Labour Department of J&K notified in September 2006 Jammu and Kashmir Building and Other Construction Workers Welfare Board under Section 18(1) of the Act.
To run the Boards and undertake welfare schemes, the Government of India also introduced a bill for levy of Cess on all the works executed. Under the provisions of the Act, all workers (including those working with contractors) between 18 and 60 years of age and having worked for at least 90 days in the preceding 12 months, engaged in construction of roads, buildings, etc are eligible for registration and for obtaining assistance from the welfare schemes.
In the month of January 2006, Government notified collection of the Cess at the rate of one per cent from all Government Departments, Public Undertakings and other Government Bodies carrying out any building or other construction works from the year 2008 onwards on the tendered value of works undertaken but started paying assistance to the member workers only from financial year 2011-12, the CAG said.
In June 2010, the Government also notified all Assistant Labour Commissioners (ALCs) in districts as Cess collectors to perform the function provided under Section 3 of the Act 1996 and Rule 4 of the Cess Rules 1998. To assess the effectiveness of the welfare schemes run by the Board for Construction and Other Building Workers, an audit was undertaken during the period between July 2020 and October 2020 to assess the effectiveness of welfare activities undertaken in the six districts namely Udhampur, Reasi, Kishtwar, Kulgam, Baramulla and Kupwara out of 20 districts of J&K.
Stating that the Cess collected, the membership registration and renewal fee and interest earned on unspent funds kept in banks are the main resources for running the welfare schemes, the CAG has pointed out that the Board had not prepared its financial statements since the year 2013-14, adding “the unspent funds of Cess collected and membership fees had increased from Rs 296.19 crore at the end of March 2016 to Rs 622.05 crore at the end of March 2020”.
During audit it came to the fore that the District ALCs, who were the Cess collecting authorities, were allowed to retain the funds in their bank accounts for undertaking activities and transfer the unspent funds at the end of each financial year to the Board. However, it was observed that despite the standing orders the ALCs did not transfer funds and continued to retain them.
After being pointed out by audit, the Board intimated in July 2021 that now the unspent balances were being deposited in the Board accounts at the end of the financial year. However, it was observed that ALCs were retaining these unspent balances in the savings bank accounts of the J&K Bank and hence earned interest. The Bank, however, changed the nature of account from savings account to current account of three ALCs from April 2018. But the ALCs had not taken up the issue with the Bank which resulted in the loss of interest of Rs 11.54 lakh during the two years 2018-20.
The CAG has further observed that no control system existed in the Board to ensure that the Cess due on the payments made to contractors on account of construction works had been recovered/received by it. Also no records/registers depicting the details of receipts, agency from whom the Cess had been received and deposit of these receipts with the Board had been maintained by the ALCs and in the absence of any effective mechanism to capture the total amount of Cess due, shortfall in Cess collection by Board cannot be ruled out.
Mentioning that registration of workers/employees is mandatory for seeking benefit under the scheme, the supreme audit institution of the country has pointed out that Board had not conducted any survey to ascertain the actual number of construction workers nor conducted any advertisement campaigns publicising benefits available under its welfare schemes to expand its reach amongst the workers.
A construction worker, to become a member, has to provide at least one of the documents in support of age from competent authority, certificate from Register of deaths and births maintained by the village chowkidar and a certificate from the Medical Officer not below the rank of an Assistant Surgeon of a Government Hospital.
However, audit scrutiny of 751 sampled cases in six selected districts showed that in 123 (16 per cent) cases, the registrations were made without submitting the prescribed proofs of age. Likewise, audit scrutiny of 751 sampled cases in six selected districts showed that in 345 (46 per cent) cases employment certificates had been issued by the contractors/ unions/ persons who were not registered under the Act. This renders the payment of Rs 17.96 lakh paid to such workers (235 out of 345 cases) in six test checked districts irregular.
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