Greater Chennai Corporation biggest defaulter with over Rs 200 crore of Labour Cess

CHENNAI: The local bodies in the state have misappropriated Labour Cess to the tune of Rs 221 crore in five years. The Greater Chennai Corporation is the biggest defaulter and it accounts for pending cess remittance to the tune of Rs 207 crore.

The misappropriation of Labour Cess came to light after an audit was conducted in 124 local bodies in 10 sample districts in the state. The outcome of the audit, according to the Comptroller and Auditor General (CAG) report tabled in the state Assembly on last Saturday, divulged that 99 local bodies out of 124 had failed to follow the norms and stacking the Labour Cess, instead of remitting to the Tamil Nadu Construction Workers’ Welfare Board (TNCWWB).

The audit was tip of an iceberg as most of the local bodies and the government departments continue such ill practice and absence of monitoring mechanism collecting and depositing Labour Cess to the rightful authority in the state.

The GCC has violated the rules to the extent of collecting the cess amount by way of cash/demand draft/electronic clearing service (ECS) from the building permit applicants instead of TNCWWB. The Chennai Corporation kept it as a receipt in a deposit head within its account (Code No 350200401).

“The money retained by GCC increased from Rs 1,58,501 in April 2017 to Rs 206.25 crore at the end of March 2022,” the CAG report said. It received Rs 206.33 crore as cess from building permit applications during the period (2017-2022).

However, the Chennai Corporation had remitted only Rs 8.5 lakh into the accounts to TNCWWB. It was less than 0.5 % of the total cess collected during the period. The violation remained unchecked as the welfare board did not have a system to estimate local body-wise receipts and to pursue it with the local bodies, the report further said.

Going by the Building and Other Construction Workers Act 1996, the welfare board would have levied an interest amount of Rs 78.91 crore from the local bodies for delay in paying the cess amount. “Since the Act is not being implemented by the TN government along with the TN Manual Workers Act, the defaulters continues to exploit the situation that has no deterrent against delayed remittance of cess,” said an official, preferring anonymity.

When the issue was taken to the notice of the Tamil Nadu government, it responded in a letter in February 2023 that the local bodies had been instructed to remit the pending amounts to the welfare board’s account.

The state government has also asserted that an online Cess Collection Module would be developed to monitor cess collection and remittance. It also directed the Commissioner of Labour Department to notify Inspectors to ensure prompt collection and remittance by the local bodies.

Sources in the Labour Department admitted that lack of mechanism to check such violation is given a free hand for the local bodies to misappropriate the Labour Cess, while chairman of the welfare board Pon Kumar told DT Next that they have taken the issue to the knowledge of the Commissioner of GCC a year ago. But, they were yet to receive the pending Labour Cess.

“We have also flagged the issue through senior bureaucrats in the department to direct the local bodies to remit the pending Labour Cess. Soon, we will come up with a robust mechanism to address these sorts of issues,” said chairman of the welfare board Pon Kumar.