In Brief
UPPTCL demanded labour cess on a supply contract for equipment based on a CAG audit report, withholding bills and invoking a performance guarantee without formal assessment. The High Court set aside the demand. The Supreme Court dismissed UPPTCL's appeal, holding that cess under the Cess Act applies only to construction, repair, and maintenance work—not mere supply of goods. A supplier is not a 'contractor' under the BOCW Act. The Cess Act prescribes a mandatory procedure for assessment and recovery, which UPPTCL bypassed. Even with an arbitration clause in the contract, courts retain writ jurisdiction to correct orders passed without jurisdiction. The CAG report, subject to parliamentary scrutiny, cannot alone justify administrative action demanding statutory dues.
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