Estd. 1941

BUILDERS’ ASSOCIATION OF INDIA (All-India Association of Engineering Construction Contractors)

G-1/G-20, 7th floor, Commerce Centre, J. Dadajee Road, Tardeo, Mumbai – 400 034. Tel : (91-22) 23520507, 23514134, 23514802 Fax: 23521328 Grams: BUILDASIND

Web Site : www.baionline.in E-mail : baihq.mumbai@gmail.com Ref: 284/S /2012-13 dated September 11, 2012

MEMBERS OF THE MANAGING COMMITTEE OF BAI

NOTICE The Fourth Meeting of the Managing Committee of Builders’ Association of India for the year 2012-

13, will be held on Saturday, the 29th September 2012 at 12.00 A.M. at The Taj Gateway Hotel (Taj Group), Jaipur Highway, Banar Road, Jodhpur, to transact the following business:-

AGENDA

1. To confirm the Minutes of the last Managing Committee Meeting held on 22nd August 2012 at

Hyderabad (Minutes already circulated).

2. To grant Leave of Absence.

3. Issues arising out of previous Meeting (Action taken report enclosed).

4. To discuss and review the latest position of:

(i) Cement Matter (Summary of the Order of Case No.RTPE-52/2006 enclosed).

(ii) Skill Development & Labour Welfare Cess (Note and Letter enclosed).

5. To take note of IFAWPCA Matters. (Minutes and Letter enclosed).

6. To take note of Centres which have not submitted audited accounts for the year 2011-12 and to propose action to be taken against such Centres. (List of Centres enclosed).

7. To take note of reports from Chairmen of various functional Committees. (Reports received enclosed).

8. To discuss and decide on the letter received from Mumbai Centre on the term ‘Builders’ Day (Letter enclosed).

9. To invite Centres for holding ‘XXVI All India Builders’ Convention’. (Letter received enclosed).

10. To take note of Membership position of each Centre as on 31st August 2012, admit New Members. (Statement enclosed) and approve opening up of New Centres.

11. To decide about date of the next Managing Committee Meeting.

12. Any other matter with the permission of the Chair. (Matter to be raised should be given in writing on or before 11.00 A.M. on 29th September 2012).

Members are requested to make it convenient to attend the meeting and also to inform Headquarter about attending or not attending the meeting. Also please bring this copy of the agenda.

Thanking you, Yours truly,

ANAND J. GUPTA

HON. GEN. SECRETARY BUILDERS ’ ASSOCIATION OF INDIA

Delhi Office: D1/203, Aashirwad Complex, Green Park Main, New Delhi 110 016 ✆ 26568763 E-mail: baidelhi16@gmail.com

Item No.3

BUILDERS’ ASSOCIATION OF INDIA Managing Committee Meeting Jodhpur – 29th September 2012

ACTION TAKEN REPORT ON THE MANAGING COMMITTEE MEETI NG HELD ON 22ND AUGUST 2012 AT HYDERABAD

1. Item

No.4(i).

Cement Matter

The Cement companies have appealed the Order of the Competition Commission of

India with the Appellate Tribunal and BAI appointed the same Counsel (Shri O.P.

Dua, Chamber No.137, Delhi High Court, New Delhi) as our Counsel to defend the

matter. The appeal has come up for admission on 13th September 2012. The matter

will be discussed in detail under Item No.4(i).

2. Item

No.4(ii)

Skill Development & Labour Welfare Cess

A meeting under the Chairmanship of Shri Ramdurai, Adviser to Prime Minister of

India were convened at Mumbai on 23rd August 2012 and the minutes of this

meeting is part of the agenda. This matter also will be discussed under Item No.4(ii).

3. Item

No.5

IFAWPCA Matters

As directed by the Managing Committee, a meeting of the IFAWPCA Monitoring

Committee was held at Mumbai on 7th September 2012. The minutes of the said

meeting along with President’s letter is enclosed herewith. This matter will also be

discussed under Item No.5.

4. Item

No.9

Centres which have submitted audited accounts for 2011-12.

The following Centres have sent audited accounts:-

(a) Madhuranthakam Centre (b) Theni Centre (c) Thrissur Centre and (d) Tuticorin

Centre..

5.

Estd. 1941

BUILDERS’ ASSOCIATION OF INDIA (All-India Association of Engineering Construction Contractors)

G-1/G-20, 7th floor, Commerce Centre, J. Dadajee Road, Tardeo, Mumbai – 400 034. Tel : (91-22) 23520507, 23514134, 23514802 Fax: 23521328 Grams: BUILDASIND

Web Site : www.baionline.in E-mail : baihq.mumbai@gmail.com

Ref: 285 /S/2012-13 dated September 11, 2012 MEMBERS OF THE GENERAL COUNCIL OF BAI

NOTICE

The Third Meeting of the General Council of Builders’ Association of India for the year 2012-13, will be held on Saturday, the 29th September 2012 at 4.00 P.M. at The Taj Gateway Hotel (Taj Group), Jaipur Highway, Banar Road, Jodhpur, to transact the following business:-

AGENDA

1. To confirm the Minutes of the last General Council Meeting held on 30th June 2012 at Chennai (Minutes already circulated).

2. To grant Leave of Absence.

3. To take note of Centres which have not submitted audited accounts for 2011-12 and to propose action to be taken against such Centres.(List of Centres enclosed).

4. To take note of and approve/ratify decisions taken by the Managing Committee at its meeting held on 29th September 2012.

5. To take note of reports from State Chairmen. (Reports received enclosed).

6. To invite Centres for holding ‘XXVI All India Builders’ Convention’ (Letter received enclosed).

7. To take note of Membership position as on 31st August 2012, admit New Members and approve opening up of New Centres. (Statement enclosed).

8. To decide about date of the next General Council Meeting.

9. Any other matter with the permission of the Chair. (Matter to be raised should be given in writing on or before 11.00 A.M. on 29th September 2012).

Members are requested to make it convenient to attend the meeting and also to inform Headquarter about attending or not attending the meeting. Also please bring this copy of the agenda.

Thanking you, Yours truly,

ANAND J. GUPTA

HON. GEN. SECRETARY BUILDERS ’ ASSOCIATION OF INDIA

Delhi Office: D1/203, Aashirwad Complex, Green Park Main, New Delhi 110 016 ✆ 26568763 E-mail: baidelhi16@gmail.com

Before The

Competition Commission of India

Case No.RTPE-52/2006

Date of Order 01.08.2012

1) M/s Shree Cement Limited - through Manas K Chaudhry & Shri Sagardeep

2) Cement Manufactures Association - through Shri. Ashok Desai & Others

3) J.K. Cements (JK Group) - through Shri. P.K. Bhatia

4) Binani Cement Ltd. - through Shri Aditya Narain & Shri R. Sudhinder

5) Lafarge India Pvt. Ltd. - through Shri. A. Haskar & Shri Samir Gandhi

6) Jaiprakash Associates Limited - through Sh Parag Tripathi & Sh G R Bhatia

7) Ultratech Cement Ltd. - through Shri. Aspi Chinoy & Shri Pravin Parekh

8) The India Cements Ltd. - through Shri. Harishankar

9) Ambuja Cements Limited - through Ramji Srinivas & Ms Anu Tiwari

10) A C C. Limited - through Shri. K Venugal and Ms. Pallavi Shroff

11) Century Textiles & Industries Ltd. - Shri. Pramod Agarwala & Others

12) Madras Cement Ltd. - through Shri. T. Srinivas Murthy

13) Builders Association of India - through Shri. O.P. Dua & Shri Rahul Goel

Order under Section 27 of the Competition Act, 2002

This case has been received on transfer from the Office of the DG (IR), MRTP Commission under Section 66(6) of the Competition Act, 2002 (‘the Act’). The MRTP Commission had taken suo moto cognizance and initiated investigation on the basis of press reports published in the business daily, the Economic Times on 09.05.2006 and 29.06.2006 regarding increase in cement prices. Subsequently, a letter dated 16.9.2006 of the Builders' Association of India (‘the BAI’) was also received by the MRTP Commission through the then Ministry of Company Affairs on 26.09.2006.

Reply of the parties : (Page No.6 –Col – 7)

The Commission also notes that parties in case No.29 of 2010 and in the present case are same except M/s Shree Cement Ltd., which was not a party in Case No.29 of 2010. As the replies of the parties (except M/s Shree Cement Ltd) have been noted in details in Case No. 29 of 2010, hence, the submissions of the parties in this case which have been dealt with in the order passed in Case N o.29 of 2010 are not repeated in extenso. Accordingly, a brief resume of the additional submissions made by the parties in case has been recorded below. However, since M/s. Shree Cement Limited was not a party in Case No. 29 of 2010, its reply is being recorded in detail :-

Reply of M/s Shree Cement Limited (Shree Cement) (Page No. – Col-8) It is also contended by Shree Cement that the intent and purpose of two legislations i.e.

the MRTP Act and the Competition Act are different and, as such, the methodology adopted by the DG is flawed and bad in law.

As per Shree Cement, there is no entry barrier in the market the input and production

costs of various companies differ from each other, the pricing, or various companies also differ on the basis of different customers segments and the various cement companies produce different kind of cements such as PPC and OPC. It has been submitted by the answering opposite party that in view of the aforesaid facts the conclusions drawn by the DG including in respect of high profit margins are erroneous and are not possible in such a market. (Page No. 18 –Col - 33)

Shree Cement has also submitted that the DG has tried to compare the data of cement price index vis-à-vjs WPI of all commodities and its other constituents such as coal, electricity and crude petroleum. It has submitted that the comparison between cement price and wholesale price index reveals that the increase in cement prices has been lower than WPI - all commodities as per 1993-94 series. The price of key input i.e. coal, whose price in WPI index is considered, takes into account only the price of the domestic coal as administered by M/s Coal India Limited and thus may not reflect the market price of the coal. At present, he supply of domestic coal on administered price is limited to only to 40-50 % of the total fuel requirement of the industry and the balance requirement is met through import or procurement of pet coke or coal from open market. It has been submitted that if one compares the coal price as prevalent in the international market, say price of South African coal, the prices have increased by over 250% over 10 year period from 2000-01 to 2010-11. (Page No.19 Col – 35)

As per Shree Cement, the profit margin calculated by the DG at Rs. 52 per bag for the period 200910 is based on retail sale price but it has ignored that deductions of the wholesaler's and retailer's margin and secondary freight which if taken into consideration would have indicated the correct profit margin which would be much lower than Rs. 52. (Page No. 21 Col – 41) Reply of Cement Manufacturers Association (CMA)

It has also submitted that the investigations made by the DG in his report are based on facts and figures for the years 2007 onwards although from the perusal of DG report, it is disclosed that the cause for complaint arose either on 9th May, 2006 or on 29th June, 2006 or at the best on 16th September, 2006. Consequently,' the facts, figures and events which took in the industry after the said period are extraneous for forming an opinion an alleged breach of provisions of the Competition Act, 2002 in the 2006. Based on above, it has been argued that the report is untenable, bad in law and no proceedings against the CMA based on such report can be initiated under the Competition Act. (Page No. 23 Col – 47)

CMA has further contended that the methodology adopted by the DG for the purposes of investigation, on the face of it, is defective, erroneous and untenable. Even if it is assumed (though denied) that nature of allegations in Case No. 29 of 2010 and RTPE No. 52 of 2006 are similar, even then time of occurrence and the prevailing situation in 2006 and 2010 were entirely different. The DG in order to implicate CMA has admittedly relied on facts and figures of 2007 and thereafter upto March, 2011. It has submitted that the said facts and figures are not relevant and cannot be relevant to implicate a party for alleged breach in the year 2006, and this factum renders the report untenable. (Page No – 24 Col – 49)

It has also alleged that various material and witnesses have been examined by the DG behind the back of the CMA without giving it an opportunity to cross-examine the said witnesses in contravention of the principles of natural justice rendering the inquiry unsustainable and bad in law. (Page No. 26 Col – 53)

Reply of M/s J K Cement Ltd. :-

It has been submitted that that RTPE No. 52 of 2006 be closed in view of pending enquiry in

Case No. 29 of 2010 which will be decided on its own merits. It has been further submitted that in the event the Commission decides to continue with RTPE 52 of 2006, M/s J K Cement adopts all the submissions made by it in Case No. 29of 2010 for the purposes of RTPE No. 52 of 2006 also and the Commission may treat the response of M/s J. K. Cement in case No. 29 of 2010 as its response to the report of the DO in the present case also. (Page No. 29 Col- 62) Reply of M/s. Lafarge India Pvt. Ltd (Lafarge) :-

After narrating the sequence of the proceedings the Lafarge has submitted that since the

Commission has decided to investigate this case under the provisions of the Competition Act, in regard to the alleged acts and/ or omissions attributed to Lafarge pertaining to period prior to the coming into force of the relevant provisions of the Act i.e. 20.05.2009 are concerned, the Commission is precluded to take cognizance of the same in connection with any investigation for finding contravention thereof. It has been argued that this has been the consistent position and approach followed by the Commission in other cases arising out of the erstwhile MRTP Act. Thus, it has been submitted that there is no merit that there is no merit in the findings contained in the report of the DG and the Commission should set aside the report completely.(Page No.32 Col-68)

Reply of M/s India Cements Ltd. :-

The contentions/objections of India Cements in the present case which have been raised and dealt with in Case No. 29 of 2010 are not being repeated for the sake of brevity. It has been submitted by M/s India Cements Ltd. that the investigation report and the allegations made therein against it cannot be sustained in terms of the provisions of the Act and therefore the proceedings as against it ought to be rejected in limine. (Page No 75 Col -75)

It has been submitted that in the instant case, the investigation was transferred under

Section 66(6) of the Act which provides that all investigations or proceedings that were pending under the MRTP Act, 1969 shall be transferred to the Competition Commission of India which shall deal with them in the manner it deems fit. Also, Section 66(1) (A) (b) and (d) read together clearly mandate that all existing investigations under the MRTP Act should be only in respect of violations of the MRTP Act and Section 66(6) merely empowers the Commission to remedy any procedural difficulties. It has been stated in this context that the investigation and consequent trial was ought to be conducted as per the MRTP Act and the failure of the DG to do so clearly deprives this Commission of the jurisdiction in the instant case. (Page No-77 Col – 77).

It has been contended that the entire Investigation Report deals with whether the actions

of the opposite parties between 2005 and 2011 violate Section 3 of the Competition Act, 2002. The DG report is the culmination of an investigation based on a complaint filed on 16.9.2006 and on suo moto cognizance taken by the MRTP Commission based on press reports dated 9.5.2006. Hence, the cause of action for the complaint, investigation se in 2006. has been submitted in this context that section 3 was brought into force only on May 20th 2009 and thus Section 3 cannot

be applied to actions prior to May 20th, 2009 as it did not exist in the eyes-of law when the complaint was filed and when the actions alleged to violate the provision took place. It has been argued that due to the absence of the jurisdictional fact of a legal provision imposing liability, namely Section 3, the present action must necessarily be dismissed. Further, M/s India Cement, while answering a case of an alleged violation of section 3 of the Competition Act, 2002, cannot be tried under the MRTP Act for offences under that Act or vice versa. (Page No -36-37 Col-78).

M/s India Cement has submitted that in the present case the findings in the DG's Report being premised on the retrospective operation of Section 3 of the Act, which is not authorized by any provision of the Competition Act, 2002, are illegal and ultra vires the Act and hence wholly without jurisdiction. (Page No -36-37 Col – 79.

Decision of the Commission :

The Commission has carefully gone through information, / report of the DG and

averments of vari2 ii the instant case. The Commission notes that in addition to substantive issues involved in the matter, the cement companies have also raised certain preliminary objections. (Page No43-44 Col-95). Evaluation of Contentions Regarding Jurisdiction

It has been contented that the DG, unlike its. predecessor DG (l&R), does not have suo moto power to investigate any breach of the section 41(1) of the Act. Accordingly, it has been argued that any investigation arising out of section 66(6) of the Act does not confer any statutory powers upon the Commission to form prima facie view under section 26(1) of the Act without routing the same through section 19(1) thereof. In the instant case, it has been argued that the Commission formed the prima facie view without establishing the causal link with section 19(1) of the Act and as such the prima facie order is bad in law. It has been argued that the Commission could have considered the inconclusive investigation as piece of information and instituted the inquiry under section 19(1) of the Act under its SUO moto powers and proceeded to form the prima facie view in terms of section 26(1) of the Act. It has also been contended that as the allegations in the present matter pertained to year 2005and 2006 the case ought to have been examined under the MRTP Act and the Competition Act cannot be applied retrospectively. It has also been argued that as the matter was being investigated by the DG (IR), MRTPC before being transferred to the Commission the rights, liabilities and obligations accrued to the parties under repealed MRTP Act are preserved and protected by virtue of Section 66(1A) of the Competition Act, 2002. (Page No46-47 Col -103).

The Commission is of opinion that the preliminary objections taken by the parties are

contr.ary to the scheme of the Act and the legal position on this aspect is quite clear. is regard it is also noted that Hon'ble High Court of Delhi in W.P.(C) 6805 / 2010 Interglobe Aviation Ltd. v. Competition Commission of India decided on 06.10.2010 has held on similar issue that where the investigation by the DGIR, MRTPC remained incomplete and the matter did not crystallize into a 'case' before the MRTPC, it was not incumbent on the DGIR, MRTPC to transfer the case to the Competition Appellate Tribunal and not to Commission. This 'view was reiterated by the Hon'ble High Court of Delhi in W.P. (C) 7766 / 2010, Gujrat Guardian Ltd. v. Competition. Commission of India decided on 23.11.2010. In this case the petitioner advanced the argument that as the matter was pending before DGIR, MRTPC the case ought to have been transferred to Competition Appellate Tribunal and not to the Commission. It was also contended that the Commission had no power to pass order under section 26(1) of the Act in such matter and that the Commission had to proceed under the provisions of the MRTP Act. The Delhi High Court

rejected tie arguments raised by the petitioner and held that "This Court finds that since the investigation was incomplete the matter was rightly transferred to the CCI. On further consideration of the material on record the CCI formed a prima fade opinion to proceed under Section 26(1) of the CA. This was not contrary to Section 66(6) of the CA. It is possible in the course of investigation that the DG, CCI forms a prima facie opinion to proceed under the provisions of the CA, 2002 itself. There is no illegality per se in such action of the DG, CCI." (Page No -47-48 Col-104).

The Commission further observes that though Shree Cement was not a party named in the

information filed in Case No. 29 of 2010, the DG while analyzing the data has fully taken into consideration the data and conduct relatable to M/s Shree Cement Limited. The Commission also in its order dated 20.06.2012 in the said case in its analysis has also referred to the same. Moreover, admittedly as the Shree Cement is a member of CMA, and therefore, the conduct of this party was also analyzed therein. (Page no -52 Col -109).

Issues (Page No-57 Col -122) The following issues arise for determination in the present case:

(1) Whether the parties in the present case have contravened the provisions of section 4 of the Act?

(2) Whether the parties in the present case have contravened the provisions of section 3 of the Act?

Determination of Issues : (Page No-57) Issue No. 1 - Whether the parties in the present case have contravened the provisions of section 4 of the Act?

Since the market construct suggests in firm or group is dominant, the Commission

observed that a detailed determination of relevant market for the purposes of establishing any abusive conduct on the part of any opposite party is not necessary. (Page no 60 col – 130).

In the present case M/s Shree Cement Limited is an additional party and accordingly the

conclusions reached there as to the effect that the market construct suggests that no single firm or group is dominant would apply in the present case also. (Page no 61 – 133 col -133).

In view of the above, a detailed determination of relevant market for the purposes of establishing any abusive conduct on the part of any opposite party is not necessary in the present case also. (Page no. 61col-134).

Issue No. 2 : Whether the parties in the present case have contravened the provisions of section 3 of the Act?

Price parallelism :-

The DG found that prices of the cement of all the companies moved in a particular

direction in a given period of time in different zones. The range of price movement was also found to o the same for all the companies and in all zones of the country. The DG noted that

whenever the prices of cement in case of one company went up, it was followed by other companies simultaneously in the different zones across the country. (Page No-64 col-142).

The data relating to the price movements of all the top companies in different States were

analysed by the DG to examine the degree of price parallelism that the economic analysis of price data clearly indicated that there was very strong positive correlation in the prices of all the companies. According to the DG, the coefficient of correlation of absolute prices of cement of all the companies confirmed the price parallelism. (Page no 64 65 col – 144 ).

The Commission held that from the correlation data analyzed and concluded by the DG,

it was evident that there was a case for existence of price parallelism among the players considered in their respective States of operations. (Page no 65 col 145).

Low capacity utilization: -

In addition to the exchange of information on prices and production using CMA as

platform, the Commission noted that there are other 'plus' or 'facilitating' factors over and above the existence of price parallelism which indicated collusive behaviour among the parties. One of the 'plus' factors that suggested a concerted action among the cement companies including the parties herein is finding by the DG as regards overall low capacity utilization and lower supply of cement by them during 2010-11. (Page no. 66 col -149).

Based on the analysis of data relating to installed capacity and production of cement, it

was held by the Commission that the cement companies indulged in limiting and controlling the production and supplies in the market in violation of provisions of section 3(3)(b) of the Act which prohibit any agreement or arrangement among the enterprises which limits or controls the production or supplies in the market. (page no 68 col-154). Production Parallelism :-

In Case No. 29 of 2010, the Commission observed from the data collected by the DG as furnished by all the companies in respect of the plant wise monthly production that there is a positive correlation in change in production output among the cement manufacturers operating in a particular region/state. (Page no 68 col-155).

From the above, it was noted by the Commission that in November—December 2010 the

cement companies including the parties herein had reduced the production together despite no apparent slackness in demand, although in 2009 while in some cases there was drop in production, in many cases there was increase also. This established that there was a coordinated effort on part of the cement companies including M/s Shree Cement to reduce supplies by curtailing production. (page no 68 69 col-157). Dispatch Parallelism:-

Further, on the basis of the analysis of dispatch data for the period two years from

January, 2009 to December, 2010 by the DG, the Commission observed that changes in dispatch of cement by the top companies including M/s Shree Cement were almost identical.(Page no 69 col-158).

The Commission also observes that the companies have sought to argue that in the

absence of direct evidence, no anticompetitive agreement can be inferred. However, the fact that

the cement companies including M/S Shree Cement meet frequently at the platform of CMA give them an ample opportunity to discuss production and prices. CMA collects retail prices and wholesale prices through the competing companies on weekly and monthly basis which further provide them opportunity to discuss and exchange information on prices. The production and dispatch details of each company are circulated to all the members by CMA. The Association is also engaged in benchmarking exercise in respect of its members. Therefore, it is evident that competing cement companies exchange information each other's production, dispatch and prices. (page no 73 col-168).

The Commission holds that in view of analysis of factors mentioned in section 19(d),

19(e) and 19(f) of the Act, it is established that the cement companies have contravened the provisions of section 3(3)(a) read with section 3(1) of the Act by fixing the prices and limiting and controlling the production and supplies in the market. (Page no 76 col-176).

The Commission also observes that as per the provisions of section 2 (c) of the Act,

cartels have been defined as under; (c) "cartel" includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services; (page no 77 col – 177). Period of Contravention :- (page no 78 col -181)

As regards period of contravention, for the purposes of this order, the Commission finds that the parties have institutionalized the system of sharing the prices, capacities and production among each other using the platform of CMA in order to limit and control the production and supplies and determine the prices of cement in the market. Since the DG has examined the conduct of the parties involved in the cartel only upto March 2011, this order captures the period from the date of enforcement of the relevant provisions of the Act, i.e., from 20.05.2009 till 31.03.2011. Order under Section 27 of the Act:-

The Commission finds the parties in the present matter including Shree Cement have contravened provisions of section 3(3) (a) and 3(3)(b) read with section 3(1) of the Act.

The Commission observes that since the cement companies which are parties in the present case have been found to be in cartel (except M/s Shree Cement) in Case No. 29 of 2010 also and penalized therein, hence, the Commission does not deem it fit to order remedies including imposition of penalty on such companies again for the same period of contravention.

It has been noted in the para 98 of this order that conduct of M/s Shree Cement Limited was not examined during the inquiry in Case No. 29 of 2010. However, in the present matter as the conduct of M/s Shree Cement has also been found in contravention of the provisions of sections 3(3)(a) and 3(3)(b) r section 3(1) of the Act, the Commission decides to imp it in terms of proviso to section 27(b) of the Act.

The calculation of penalty limit based on net profit in terms of section 27(b) is as under:

Name Gross turnover for 2009-10 (In Rs. crore) taking into account period of contravention post Notification i.e. 20.05.2009 on pro-rata basis (In Rs. Crore)

10% of Turnover as calculated in column 2 (in Rs. Crore)

Gross Turnover for 2010-11 (in Rs. Crore)

10% of Turnover calculated in column 4 (in Rs. Crore)

Total (In Rs. Crore)

M/s. Shree Cement Ltd.

3475.20 347.52 3937.78 393.77 741.29

The calculation of penalty limit based on net profit in terms of section 27(b) is as under:

Name Net Profit 2009-10 taking into account period of contravention post Notification i.e. 20.05.2009 on pro-rata basis (In Rs. Crore)

3 times of Net Profit as calculated in column 2 (in Rs. Crore)

Net profit 2010- 11 (in Rs. Crore)

3 times of Net Profit as calculated in column 4 (in Rs. Crore)

Total (In Rs. Crore)

M/s. Shree Cement Ltd. 585.33 1755.99 209.70 629.10 2385.09

It would be seen from the above that the amount of three times of net profit calculated as above is higher than 10% of the turnover. Since as per the provisions of Proviso to Section 27(b) the penalty has to be determined on the basis of net profit or turnover whichever is higher, in this case the net profit has been taken into account by the Commission. Therefore, considering the totality of the facts and circumstances of the instant case, the Commission decides to impose a penalty of 0.5 time 01 net profit for 2009-10 (from 20.05.2009) and 2010-11 in case of M/s Shree Cement in this case. Accordingly, the penalty amount is determined as under”

Name Net Profit 2009-10 taking into account period of contravention post Notification i.e. 20.05.2009 on pro-rata basis (In Rs. Crore)

0.5 times of Net Profit as calculated in column 2 (in Rs. Crore)

Net profit 2010- 11 (in Rs. Crore)

0.5 times of Net Profit as calculated in column 4 (in Rs. Crore)

Total (In Rs. Crore)

M/s. Shree Cement Ltd. 585.33 292.66 209.70 104.85 397.51 Since the enforcement provisions of the Act have come into effect from 20.05.2009, for

the calculation of penalty in the present case, the period from 1.4.2009 to 19.05.2009 has not been considered and amount of penalty has been calculated accordingly for the balance period of 2009-10.

The Commission also directs M/s Shree Cement to 'cease and desist' from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.

The Commission decides accordingly. M/s Shree Cement should deposit penalty amount within a period of 90 days from the date of receipt of this order and also file an undertaking in compliance of direction given in preceding para within same period.

The Secretary is directed to communicate this order as per regulations to all the parties. Sd/- Sd/- Sd/- Member (G) Member ( R) Member (GG) Sd/- Sd/- Sd/- Member (AG) Member (T) Member (D) Sd/- Chairperson

Brief Report of the Appeal filed by M/s. Century Textiles & Industries Ltd. in the Competition Appellate Tribunal against the Order of

Competition Commission of India in Case No.29/2010 Builders' Association of India filed a case in the Competition Commission of India, in the year 2010, vide case No.29/2010, against the Cement Manufacturers / Companies alleging the cartelization / unfair trade prices. On the basis of the complaint filed, Competition Commission ordered the Directorate General (Investigation) to investigate the matter. The findings of the report were sent to all the cement companies for their replies / comments and on receipt of their replies and oral submissions in the Competition Commission in Feb 2012, the Commission passed orders on 20.06.2012, holding the cement companies guilty of indulging in unfair trade practices and imposed penalty on 11 Cement manufacturers. M/s. Century Textiles have been imposed a penalty of Rs.274.02 Crores. The Commission has further directed should cease and desist from indulging in any activity relating to agreement, understanding or agreement on prices, production supply of cement in the market. The Commission has broadly found that :-

- Cement Industry in India is oligopolistic in nature and price of cement charges by all the companies is not a competitive levels and the cement manufacturers have been operating at a profit margin of more than 25%.

- The prices were not determined by market forces and accordingly the DG made further investigations to examine whether there was other factors which were behind the rise in price of cement.

- That the data gathered during the investigation show that the prices of all the companies move in the same manner towards similar directions and the Economic Analysis of Data confirms that the Coefficient of Correlation of change is prices of the movement of all the companies is positive and very close to each other (more than 0-.5%).

- That the relating to capacity utilization of the cement companies has been below the optimum level despite the fact that no major addition in capacity was made by them during 2010-11,

- That the facts establish that there was a conscious decision to maintain low level of capacity utilization so that higher prices can be charged and abnormal profits may be earned,

- That the decisions relating to increase or de crease in dispatches are so close that there are indicative of some kind of meeting of mind.

- That the cement companies are using the Press and Media for signaling the price increase in coming days which serves the purpose of price signals to the competitors.

The appellant company has disputed the findings of DG in its reply and, inter-alia submitted :-

- That the increase in price of the Appellant was not uniform or simultaneously with the

other respondents but the company has fixed its own prices and in doing so had also followed the market trend.

- That the appellant has not participated in any discussions concerning cartelization / discussions on prices either in any of the alleged meetings conducted by CMA or otherwise where prices or mode or means to regulate production, supply etc. of cement were discussed or made undue profit.

- That the Appellant had been collecting, under the instructions of CMA, retail weekly prices of cement from Kolkata, as also under the instructions of the Govt. The price so

collected were stale and were not company specific and were submitted to CMA/DIPP on weekly / monthly basis or sometimes next month.

- That the Appellant had utilized optimum capacity and its capacity utilization in the year 2007-08 was 98.78,% 2008-09 was 92.51% (because during Jan-Mar 2008 one million ton capacity added), in 2009-10 was 97.22% and in the year 2010-11, it was 98.74%. Thus no adverse inference or concerted reduction of capacity utilization could be arrived at against the Appellant.

- The appellant denied that it is collusion with other manufacturers or otherwise divided the territory of India into five zones to enable the cement manufacturers to control the supply and inter-alia determine or fix exorbitantly inflated price of cement as result of the alleged cartel.

- It was also denied that the profit margin of the appellant for the relevant period was abnormally high but on the contrary had remained modest. The profit margin during the FY 2007-08 was 15.42%, 2008-09 was 12.7%, 2009-10 was 19.41% and 2010-11 was only 10.63%.

- That the appellant has a market share of only 3.65% and therefore it cannot be a market leader or cannot have the maximum market share in four out of the five regions as alleged or otherwise.

- That the DG has completely failed in establishing its theory of the cement industry being oligopolistic in nature.

- That the cement is a commodity and is manufactured as per the BIS Standard of quality. Its prices therefore move in a narrow band as nobody can sell the product of the same quality at a price much deviating from the ruling price in the market.

- That the appellant cannot be equated to the other respondents as the appellant had utilized its optimum capacity and had dispatched the entire product in usual course, and, as such no concert can be read in the dealing of the appellant.

- That no case has been made out against the Appellant as there is no allegation in the entire report against the Appellant. The report also does not indicate anywhere as to why the Appellant has been impleaded as a party.

FACTS IN ISSUE / QUESTION OF LAW:- - Whether in facts of the case the Commission could come to any conclusion of anti

competitive practice against the Appellant? - Are the facts in the Appellant’s case not clearly distinguishable from the facts considered

by DG and as such no allegation could have been made by the DG against the Appellant - Whether the entire report read as a whole discloses any act or omission on the part of the

Appellant to invite the grave and serious charges of anti-competitive activity on its part? - Whether the Commission has given any finding on facts against the Appellant which

could constitute the basis of its holding appellant guilty of indulging in anti-competitive activities inviting an exorbitant penalty of Rs.274.02 Crores.?

- Whether the collection of the retail and wholesale price data by the Appellant which was done by it under the instructions of CMA and DIPP could invite an adverse finding of anti-competitive practice on the part of the appellant ?

- Whether the Appellant was guilty of curtailing its production and / or reducing its dispatches in the market to regulate the price of cement ?

- Whether the Appellant made undue high profit in the range of 26% to 27% as has been allegedly made by the parties indulging in anti-competitive activity ?

- Whether the Competition Commission has correctly read and applied the case laws placed before it for its consideration ?

GROUNDS - The Commission has failed to take into consideration the submissions that distinguishes

the Appellant’s case from the case set out by the DG against the opposite parties. - The Commission did not take into consideration that the Appellant had not reduced its

production during the years 2008-09, 2009-10 and 2010-11 vis-à-vis the average industry capacity utilization.

- Because the Appellant did not reduce the supply of cement during the relevant year in the market as it dispatched almost the entire cement that was manufactured by it.

- The Commission did not take into consideration that the profit margin of the Appellant was not at par with that of the companies allegedly indulging in cartelization.

- The Commission failed to take into consideration that the Appellant is a very small player in the market with only 3.65% market share.

- There is no evidence nor any finding to show a meeting of mind of the Appellant with others against whom anti competitive practice has been alleged nor there is any finding.

- The relevant ingredients of any-competitive agreements are the control of production and supply in the market with an object to make undue profit. The Commission erred in not appreciating that in the case of Appellant, there had not been any reduction in production, reduction in supply, nor has made undue profit.

- The Appellant could not have been penalized along with others merely because the Appellant had been collecting wholesale and retail prices from the Kolkata at the request of DIPP and CMA.

- The Commission erred in not taking into account the submission and written argument in its consideration which clearly distinguished the case of the Appellant from others.

- The impugned order is otherwise also the contrary to law, facts and issues involved in the matter.

The Appellant submits that in the facts of the case and, the grounds enumerated, the

impugned order dated 20th June 2012, passed by the Competition Commission of India in Case No.29/2010 to be set aside against the Appellant.

In view of the facts mentioned, points in dispute and question of law and grounds set out, the

appellant prays for the following relief :- a) That the Hon’ble Tribunal may be pleased to set aside the order of the Commission

passed in case No.29/2010 under Section 27 of the Competition Act, 2002 dated 20/06/2012.

b) Pass any other order that the Hon’ble Tribunal may find fit and proper in the facts and circumstances of lthe present case.

Appellant – Century Textiles & Industries Ltd.

Through Promod B. Agarwala, Advocate. C34, Neeti Bagh, New Delhi-110049

Dated at 25th day of August 2012.

BUILDERS’ ASSOCIATION OF INDIA

Managing Committee Meeting Jodhpur – 29th September 2012

Item No.4 (ii)

Skill Development Training & Labour Welfare Cess. National Skill Development Corporation (NSDC) formed by Finance Ministry under Section 25 of the Companies Act, with CII, FICCI and ASSOCHAM as other stakeholders. NSDC has an equity base of Rs.10 Crores of which Government of India accounts for 49%, whereas private sector has balance 51% share. NSDC has identified 21 industries facing shortage of skilled personnel. NSDC drawn up a plan for training of 240 million skilled personnel in different categories of trade and certification during 2010 – 2022 period. Construction Industry employed 35968000 people in 2008 and is expected to employ 83270000 by 2022 as per table ‘A’ below:-

Table – ‘A’

Projected Human Resources Requirement (2008-2022) (figures in’000’)

Sector 2008 2012 2018 2022 Incremental Infrastructure 25177 33868 48280 58289 33111 Real Estate 10790 14515 20692 24981 14191 Total 35968 48383 68792 83270 47302 The total incremental requirement of 47302000 (83270000 less 35968000 = 47302000) is break up for different category is as follows:-

Table – ‘B’ Profile of People Incremental

Requirement Bar Benders Masons Plumbers Carpenters Surveyors Others (including quality glazing workers, painters, equipment operators). Minimally educated.

1419000 1419000 1183000 1892000

47000 459000

38038000

Total 47302000 National Skill Development Corporation (NSDC) convened a meeting on 3rd June 2011 in New Delhi with the objective of discussing and evolving a consensus amongst the concerned stakeholders towards formation of Sector Skill Council (SSC) for Infrastructure and Building Construction Sector. BAI was represented by Shri Raj Pal Arora, Hon. Secretary, BAI Delhi Centre and Shri Satnam Singh Arora, Executive Officer, BAI Delhi office.

A Working Group was formed for the creation of Sector Skill Council for the Construction Sector. Shri J. Ganguly (retired from L&T) is the Chairman of the Working Group, Shri Raj Pal Arora, BAI is the Co-Chairman and Siddharth Singh, Secretary General, CFI is the Convenor of the Working Group. The Working Group has to submit their report to the NSDC by second half of 2012. The need for the Sector Skill Council (SSC) in Construction stems from the lack of any Structured Training for development of Trade Skills in the Construction Sector and to create a credible and effective mechanism with the support of relevant and interested stakeholders for managing the task of skill development across the country for meeting the current and future skill needs of the construction industry. Formation of Construction Sector Skill Council. It was tentatively decided that, newly formed ‘Construction Sector Skill Council’ should have two representatives from each of Promotor Associations namely Construction Federation of India (CFI), Builders’ Association of India (BAI), Confederation of Real Estate Developers Association of India (CREDAI), National Highway Builders’ Federation (NHBF). Accordingly Shri S. Ramadorai, Advisor to the Prime Minister, National Council on Skill Development called a meeting of Presidents of Promoter Associations and others on 23rd August 2012 at Mumbai. It was decided in the said meeting to constitute Construction Sector Governing Council having following members:-

o Mr. AjitGulabchand and Mr. S N Subrahmanyan (CFI nominees) o Mr. Seenaiah and Mr. D L Desai (BAI nominees) o Mr. Lalit Kumar Jain and Mr. Shekar Reddy (CREDAI nominees) o Mr V C Verma and Mr. S. Mukundan (NHBF nominees) o Mr. N Hiranandani, Mr PhillieKarkaria and Mr. J Ganguly (addl industry nominees) o 1 nominee from NSDC to be communicated in September o 1 Government nominee from the Planning Commission to be decided by Advisor to

Prime Minister. o 2 technical advisors in the Council (from the skills side) to be decided upon

subsequently by the remaining members of the Governing Council. o The CEO to be inducted into the Governing Council as an ex-officio member, with

voting rights. Shri Ajit Gulabchand was requested to become Chairman of Governing Council. The Members agreed to mandating at least 20% labour certified by CSSC in all construction projects, by end of year 3, and agreed to contribute to meet SSC funding requirements for first three years (Industry contribution of Rs.7 Crore needed). It was decided that : − Col N B Saxena (L&T),Mr. Siddharth Singh (CFI) and Mr. RajpalArora (BAI) to engage

with NSDC to ensure that the Proposal is presented to the NSDC Board on 27th Sept. − Mr. Gulabchand’s Office to set up a Secretariat to fast track setting up of the SSC as a

Section 25 Company and create recruitment policies. In addition, the Office would coordinate with industry associations to get some seconded staff working full-time for the SSC for a minimum of one year, and to fix the date for the next Governing Council meeting.

− L&T to help with finalizing the model and implementation plan for the trainer-training and certification components of the SSC.

− The first Governing Council meeting to especially focus on creating a plan for developing (master) trainers in the sector.

− In addition, the Governing Council to come back to the Advisor to the PM, NCSD with specific industry recommendations/asks on use of Building and Other Construction Workers’ Cess for the SSC and/or training activities in construction

− NSDC would be forwarding MoA/AoA format to Mr Gulabchand’s Secretariat for CSSC Co formation.

Aspect of Training & Certification. While certification requires no funding, training of construction workers involves substantial finance. Governing Council Members feel that, Construction Workers Cess fund be utilised for this purpose. However, there is no provision in Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 for imparting vocational training to registered construction worker. Fortunately, the State Government of Delhi have come out with Delhi Gazette No.24, dated 10th February 2012 facilitating the availment of Construction Welfare Cess collected from Contractors for training of construction workers (copy attached and marked as Annexure ‘A’). Similarly, the Ministry of Labour And Employment, Government of India, came out with a Notification No.Z-20011/05/2010-BL dated 21st May 2012 facilitating the availment of Construction Welfare Cess collected for training of construction workers. Both the Delhi Gazette and the Notification are attached in the agenda. (copy attached and marked as Annexure ‘B’).

Date: September 5, 2012

The Hon’ble Minister Labour and Employment Government of India NEW DELHI Respected Sir, 1. We submit that we are engaged in the business of execution and construction or roads, dams, buildings, bridges, development of infrastructure etc. The buildings and construction activities carried out by the builders, contractors are distinctly different from other conventionally established industries, such as manufacturing, trading, service etc., In fact, the activities of building and construction, do not constitute an industry, and are not even recognized by the Govt. as being so. The provident fund Act 1952, which is enacted for the purposes of providing security, to the families of employees working in industries in events such as his retirement or untimely death, can not made applicable to our industry on par with any regular manufacturing industry due to following grounds. 2. It is submitted that the Parliament has enacted the Provident Fund Act. In the year 1952 and the same applies to every establishment which is a factory engaged in any industry, specified in Schedule-I, in which 20 or more persons or class of such establishments, which the Central Government may by notification in the official gazette specify in this behalf. The Provident Fund Act is enacted for the purpose of establishing an institution of Provident Fund for employees in such factories and other establishments for the better future of the industrial worker on his retirement and for the benefit of his dependants in case of his death, while in employment. Plain reading of section 1, of the said Act together with its sub sections, make it apparent that the underlying idea is to bring establishments, who have 20 persons in the employment and which persons are working with an element of regularity to bring such establishments which its’ purview. Further, the statement of objects and reasons and the plain reading of the Act makes it clear that is envisages and relates to an industry and not to any activity when cannot be categorized as an industry. The word establishment is to be read in line with the dominant object and thus means an establishment of an industry. Permanency or at least semi-permanency and not casualness are covered section 1 (5) of the Provident Fund Act, supports our submission that there should be continuity of employment in establishment and concept of continuity in service stands to be apparently embedded in sub sections 3 and of section 1 of the Provident Fund Act. Therefore, engagement of a particular worker or particular person, for a particular work which is of a casual nature and who is employed due to the exigencies of circumstance, for a very brief period, cannot be interpreted to mean an employee for the purposes of the Provident Fund Act. The concept of employment for the purposes of the Provident Fund Act excludes engagement of casual workers for temporary periods and the word “employment” has necessarily to be construed as regular, permanent or semi-permanent employment in the factory or establishment or an industry. It certainly cannot apply to those casual workers who may work for a very brief duration and then come back to work on the same site/project.

3. It is further respectfully submitted that vide notification No. GSR 1308 dated 17th September, 1964 the establishment of engineers and engineering contractors, not being exclusively engaged in building and construction industry were brought under the purview of the Provident Fund Act with effect from 31st October, 1964. By subsequent notification dated 23rd September, 1990 issued in exercise of powers conferred by sub clause (b) of sub section 3 of section 1 of Provident Fund Act, the union of India, specified every establishment engaged in the building and construction activity in which 20 or more persons were engaged as a class of establishment of which the provisions of Provident Fund Act would apply with effect from 31st October, 1990. 4. In view of the above said amendment, the all the builders’ whoever employing 20 or more persons with regularity and which employees figure on the employment rolls, under the specified salary limit are required to be covered under the EPF Act. Accordingly, we are registered our establishments under the provisions of the Provident Fund Act with individual code numbers. 5. In this connection, it is necessary to submit that up to 31st October, 1990 paragraph 26 (2) of the Provident Fund Scheme stood as follows:

26 (2) After this papagraph comes into force, in a factory or other establishment every employee employed, in or in connection with the work of a factory or establishment, other than an excluded employee, required to become a member from the beginning of the month, following that in which he completes (three months continuous service) of has actually worked for not less than ( 60 days within a period of three months or less) in that factory or other establishment or in any factory of establishment (to which the Act applies), under the same employer or partly in other (or has been declared permanent in any such factory or other establishment whichever is earliest)”.

6. That this paragraph 26 (2) was amended and after amendment was enforced w.e.f 1st November, 1990 the same reads as follows:

“26 (2) After the paragraph comes into force, in a factory or other establishment, every employee employed, in or in connection with the work of that factory or establishment, other than excluded employee, who has not become a member already shall also be entitled and required to become a member of the fund from the date of joining the factory or establishment”.

7. After the 1990 amendment to paragraph 26 (2) of the P.F. Scheme although the qualifying period for entitlement to become member of the P.F., which was there prior to the amendment, has been dispensed with, yet the amendment by no stretch of imagination would bring within the fold of paragraph 26 (2), daily rated, casual/temporary workers engaged at work sites mostly by the Thekedars/petty contractors in multi-tier system because the words “every employee employed” and “date of joining the factory of establishment” appearing in paragraph 26 (2) of the P.F. Scheme, clearly emphasize that the joining the factory or establishment for employment, has to be permanent or semi-permanent in nature or in the other works contemplates continuity in service. It necessarily excluded casual workers or daily wagers, with no continuity of service, bring brought, within the purview of the Act.

8. The purpose of the Act can never be to extend benefits to unskilled workers, who are temporary and mobile and who are not regularly employed. These casual workers may work only for a day or for a few hours and may never further do any work on the same site/project. It it commonly known that these contractors simultaneously take a number of jobs and rotate their casual labour form one site to another. There is no employer-employee or master-servant relationship between the builder and the causal rotating worker as there is no control or supervision, which can be exercised by the former upon the letter nor any element of permanency or continuity of service of the latter with former,. The Act is designed to cover only those employees who has some continuity of service. 9. It is therefore our humble submission is that the Act is not applicable to the case of casual workers, who do not satisfy the definition of an employee under the Act, and since the establishments of the Builders are concerned with casual workers, the Act does not apply to them. In this context, it is pertinent to mention that vide orders dated 27.11.1992 and 19.5.1992 the Hon’ble Division Bench of Delhi High Court, in the proceedings, had directed the EPF authorities to submit the modification, to the existing procedure, for implementation of the amendment to para 26 of the employees Provident Fund Scheme as amended. The Hon’ble High Court also directed that the scheme in respect of peripatetic labour be evolved with the following features. 1. The member should be in a position to make the withdrawal at any place. 2. The member should have the same account number which should be valid anywhere in the country. 3. The Scheme should enable the member to withdraw the money conveniently from the nearest Provident Fund Office. 4. The scheme should enable member to know about the balance of his credit at any given point of time. 10. It is submitted that it has been over twenty years, since the amendment to para 26 of the Employees Provident Fund scheme was brought in and in spite of the orders passed by the Hon’ble Division Bench of the Hon’ble High Court of Delhi dated 27.11.1992 and 19.5.1992, asking the P.F Department to take effective steps for implementation and its directions towards the evolvement of the scheme, the Department have not taken any steps to implement the same, despite of the undertaking recorded in order dated 19.9.1996 given by the EPF department. 11. It is evident that the scheme cannot be implemented unilaterally unless The EPF Department provide for proper mechanism there is not purpose in making these demands, upon the Employers, to contribute towards the fund. On the other hand harassing the managements by making arbitrarily and illegal demands, stopping payments due to the employers arbitrarily under the Government contracts executed by them, asking for records and inspection of document and threatening the employers with coercive and harsh actions including seizure of their bank account and civil detention. 12. It is submitted that the interpretation sought to be given by the EPF department in seeking to interpret para 26 of the scheme so mean that the builder and construction agencies is liable towards contribution of the fund under the Act, even if the casual worker works for only one day is completely erroneous and impracticable. The same could never have been the intention of the

legislature as held in various judgments of the Supreme Court & various High Courts. The scheme of the Act is to provide for the security, insurance and pension for the worker with some continuity of service. Thus, is other words, to enable the worker to have access to funds in his/her old age, it is thought of applying the scheme, to the working class. This necessarily implies a long standing, regular and continuous working relationship with the employer, which I obviously not the case with casual workers in the building and construction establishments. 13. Because the purpose of the Act is to provide for the institution of Provident Fund pension and insurance Funds simultaneously. It evidently cannot be extended to building and construction activities due to its peculiar features, such a, the transient and migratory nature of the labour, employed by the contractors, in order to provide services to the builders there can be no occasion for the builder to contribute towards the pension and insurance funds, as there is no permanency in the relationship between the builder who sub contracts the work to the subcontractor/thekedar and the daily labour employed by the sub-contractor. The entire purpose behind the grant of pension and insurance is to provide security to a regular worker, who is to be compensated for the long standing relationship with a particular industry and employer. This is clearly evident from the fact that the pension and the insurance fund is deductible by the employee only after he has served for a period of 9 years. This obviously cannot be extended to the building and construction activity for casual labour wherein the contractor at the outset is not employer, but merely sub contracts the work and in any case has no nexus or relationship with the labour who may change on a daily basis. This is the reason that the said labour is not even on the rolls of the builders as they do not work regularly for the builders and this do not fall under the category of employees of the builder. Hence it is a deaf pointer to the fact that this Act & the scheme made there under is not meant for employees more so casual employees in the construction & building, infrastructure establishments. 14. Further, the scheme in any event is ineffective and cannot be implemented in its present form is evident from the fact that even though the Govt. has recovered crores of rupees in this account, admittedly it has not been able to pass on the same for the benefit of the workers. Therefore, the entire purpose for which the scheme has purportedly been formed is lost. In fact in order dated 29.8.1998 passed in writ petition no. 2393/97, the Hon’ble High Court of Bombay (Nagpur Bench) has observed that the funds so collected are still lying with the Govt. and that there is a deficiency in the implementation of the scheme as observed by the High Court of Bombay in Sandeep Dwellers Pvt. Ltd. vs Union Of India (UOI). 15. Further, it is obvious that such a scheme can never benefited all the casual workers as the proceeds of the same have not still been passed to them. The casual workers themselves are not interested in the scheme and refuse deduction of contribution towards the fund from their wages, as a result the liability of contributing employee’s share, towards the funds, is also passed on to the petitioner. Further, due to the mobile and transitory nature of the casual construction work it is virtually impossible for the petitioner to implement the scheme, in terms of maintenance and filling, record, forms containing details such as date of joining and living, residence and other prescribed particulars of the casual workers. 16. We further respectfully submit that the construction industry as a whole has certain peculiar charastarics, which generally absent in any other industries or establishments. APPLICABILITY OF THE ACT; a. It is submitted that the Parliament has enacted the Provident Fund Act and the same applies to every establishment which is a factory engaged in any industry, specified in Schedule-

I, in which 20 or more persons or class of such establishments, which the Central Government may be notification in the official gazette specify in this behalf. The Provident Fund Act is enacted for the purpose of establishing an institution of Provident Fund for employees in such factories and other establishments for the better future of the industrial worker on his retirement and for the benefit of his dependants in case of his death, while in employment. Plain reading of section 1, of the said Act together with its sub sections, make it apparent that the underlying idea is to bring establishments, who have 20 persons in the employment and which persons are working with an element of regularity to bring such establishments which it’s purview. Further, the statement of objects and reasons and the plain reading of the Act makes it clear that is envisages and relates to an industry and not to any activity when cannot be categorized as an industry. The word establishment is to be read in line with the dominant object and thus means an establishment of an industry. Permanency or at least semi-permanency and not casualness are covered section 1 (5) of the Provident Fund Act, supports employer submission that there should be continuity of employment in establishment and concept of continuity in service stands to be apparently embedded in sub sections 3 and of section 1 of the Provident Fund Act. Therefore, engagement of a particular worker or particular person, for a particular work which is of a casual nature and who is employed due to the exigencies of circumstances, for a very brief period, cannot be interpreted to mean an employee for the purposes of the Provident Fund Act. The concept of employment for the purposes of the Provident Fund Act excludes engagement of casual workers for temporary periods and the word “employment” has necessarily to be construed as regular, permanent or semi-permanent employment in the factory or establishment of an industry. It certainly cannot apply to those casual workers who may work for a very brief duration and then never come back to work on the same site/projects. b. ABSENCE OF FIXED PREMISES There are no fixed premises for execution of work by these employer. The work is carried out mostly in the open where the project is situated. In fact, may a times, the construction and road projects are located in uninhabited areas at far of places, in cities and towns, in jungles or in river or on oceans. The work-site go on shifting especially in case of road construction. This peculiar fluctuation in the environment makes it incumbent upon the contractors to engage the local workers who are accustomed to and who can withstand such weather conditions prevalent in the areas of operation. As a result of this the contractor has to engage different sets of people for doing different kinds of work in different climatic conditions and this makes the strength and quality of the work-force highly unstable and liable to frequent change. Where it is a question of construction a building, the labour is again subject to frequent change as the subcontractors, engaged in such activities, more often than not, work simultaneously on more than one site and hence the labour is subject to frequent change, from one site to the other. c. UNIQUENESS OF EACH CONSTRUCTION JOB: There are several types of works such as excavation work, foundation work, masonry work, carpentry work, slab work so on and so forth. There are workers who are experts in each type of work and they usually work in groups, take a particular job and go away after completion of such jobs. There are hundreds of varieties of work which are required to be done by experts and highly specialized groups. All these different specialized activities make the duration of work of a particular groups at a particular work site very short which could be as frequent as one day on one site & the next day on the other. There is remote possibility of the same group being re-employed by the same contractor for the same job on the same work site. These workers are normally migratory, rural, from agricultural community. During agricultural operations they go back to their fields, for traditional agricultural work. It is not certain whether the same persons

might come back to construction work after harvesting and cropping season is over. The work force is, therefore, unstable. Construction activities have no assured continuity of work. The work is quite often discontinued for different reasons which include lack of details or decisions, change in design, shortage of materials, shortage of work force etc. more often than not, even the sub contractors engage different labour every day, depending upon quantum of work to avoid fixed cost. d. MULTI-TIER SYSTEM: Normally, Government, Semi-government or public Bodies award the construction work to contractors like the employer, employer in turn, sub contract the work to several sub contractors depending upon the variety of jobs involved, in the main contract and vis-à-vis the sub contractors the employer become the principal employer. The sub contractors, in turn, again engage petty contractors or Thekedars who are awarded execution of different smaller jobs on piece rate basis. These Thekedars or petty contractors then in turn employ their own work force, who is usually, migratory labour and are “called site workers”. It is in this manner that the execution of the contract, is done by sub contractors. It will thus be seen that the Government, Semi-Government or public bodies, who award the main contract are principal employers vis-à-vis the main contractors like employer who in turn become principal employers, vis-à-vis sub contractors, who in turn become principal employers vis-à-vis the petty contractors, who actually employ daily rated migratory, temporary/casual labour/workers. There is not supervision or control by the main contractors, like employer, over the daily rated temporary/casual worker, actually engaged at the work sites by the sub contractors, petty contractors. These daily rated workers do their specialized or unskilled jobs at a particular work site and then move on the another site, never to return to the earlier site. These daily rated temporary/casual workers are not at all interested in and to the contrary are totally opposed to any deduction being made from their daily wages, towards Provident Fund contributions or any other contribution. Any deduction from their wages is vehemently opposed by them. These petty contractors having the expertise to do a particular job are engaged by the contractors or sub contractors and such Thekedars/petty contractors transfer their groups from one site to another, belonging to different contractor/sub contractor & at times the said transfer takes place even on the same day. This makes it impossible for the main contractors like the employer to keep track of these site workers, who have no permanent address. They are constantly moving from place to place and are untraceable in future. e. IDENTIFICATION OF BENEFICIARIES It is further respectfully submitted that the purpose of the Act does not seem to be to impose some levy upon employer or employees. It is not in the nature of tax but as has been held in case of the Provident Fund Inspector vs. T.S. Hariharan reported in 1971 (2) SCC 68, and various other judgments including that of Appellate Tribunal, the purpose is to develop habit of saving in such employees. Identification of employee is therefore held to be must before effecting such recovery. It is the part of wages earned by such employees which is being deducted by the P.F. department and ultimately it is to be returned back to him. If his identity is not known, the amount cannot definitely be returned to him and as such there is no point in effecting deduction from employer on account of such unknown worker. Habit of saving cannot be developed unless and until the wages are earned continuously and consistently. The following observations of Hon Apex Court in case between The Provident Fund Inspector vs. T.S. Hariharan reported 1971 (2) SCC 68 assume importance here:

The Act was brought on the statute book for providing for the institution of provident fund for the employees in factories and other establishments. The basic purpose of providing funds appears to be to make provision for the future of the industrial worker after his retirement or for his dependents in case of his early death. To achieve this ultimate object the Act is designed to cultivate among the workers a spirit of saving something regularly, and also to encourage stabilization of a steady labour force in the industrial centres. This Act has since its initial enactment been amended several times to extend its scope for the benefit of industrial workers.

f. This view was upheld by the Hon’ble High Court of Bombay in the case of Sandeep Dwellers Pvt. Ltd. vs Union of India, reported in reported in 2007 (1) LLJ page 518 have held that the casual and temporary workers employed through the contractors are not required to be covered unless they are identified. Therefore, with a direction to conduct a fresh enquiry, the mater was remitted back to the Department with the following directions; Employer have attempted to demonstrate that as beneficiaries are unknown and the department itself had doubts, recovery from any earlier date for which no deduction has been made should not be allowed. The law in the point is already discussed above. The beneficiaries must be know and the amount of deductions cannot be permitted to lie idle with the department. Hence while finding out whether employees are covered under the Scheme/Act or not, this issue can be conveniently gone into by authority under Section 7-A of P.F. Act and it can choose to give effect to its order from any appropriate date as per evidence on record. g. The issue was again considered by the Supreme Court in the case of in the case of Himachal State Forest Corporation. Vs. RPF Commissioner 2008 Labour Law Reporter page 980 and further held that the demand of the department is ole and stale, the contributions can only be claimed for the beneficiaries who can be identified. The Supreme court has also further held that the old record which is not available with the management should not be insisted to be produced. h. It is submitted that the amount cannot be demanded by department if beneficiaries are not identifiable. The order dated 5/2/1991 passed by Hon’ble Apex Court in writ petition (Civil) No. 1212 of 1989 between A.I. Construction workers union v. Union of India State that the Hon’ble Apex Court also wanted P.F. department to propose appropriated scheme to protect the deductions made for such migratory site-workers but no such scheme as ever placed by department before either the Hon’ble Apex Court or any High Court. In fact the proceedings of 134th meeting of Central Board of Trustees {CBT} of Provident Fund department in which the issue of various cases pending in various High Court about the amendment to paragraph 26 was considered vide item No. 7. In the meeting the Trustees themselves found that though amendment is found to be valid, the delivery system of services is found to be inadequate, the Trustees therefore felt that scheme as per amended para 26 should be applied to Employees other than peripatetic Employees until new work procedure is evolved. Further, the Trustees also expressed that casual or temporary Employees who were not employed for 30 days in 45 days would not be eligible to become member of provident fund. In this background the determination of said question about casual employees as decided by Employees Provident Fund Appellate Tribunal in case number ATA – 9 (6) 98 between Forest Development Corporation of Maharashtra v. Regional Provident Fund Commissioner. also in the order dated 23/3/2005 passed by Appellate Tribunal in appeal ATA number 966(12) 2004 between BSNL v. Assistant Regional Provident Fund Commissioner, Udipur which holds that purpose of Act is not to collect money and declares that amount cannot be assessed or recovered before the workers/beneficiaries are identified. Similar view was also taken by Hon’ble Apex Court in

judgment between Food Corporation of India v. Provident Fund Commissioner reported at in this respect. 17. We further respectfully submit that the News paper establishments to whom the provisions of EPF Act made applicable were given an exemption by addition one more provision in the PF scheme which reads as follows : PARA; 80 of the EPF SCHEME ;- Para-26: Class of employees entitled and required to join the fund: 1 (a) Every news paper employee employed to do any work in, or in relation to, any new paper establishment to which the scheme applies, other than an excluded employee shall be entitled and required to become a member of the fund from the beginning of the month following that in which this paragraph comes into force in such establishment, if on the date of such coming into force he has completed (three months continuous service) or has actually worked for not less than 60 days during a period of three months or less and in that news paper establishment to which Act applies under the same employer are partly in one or partly in the other or has been declared permanent in any such factory or other news paper establishment whichever is earliest. This provision was incorporated under the EPF scheme vide GSR No. 130 dated 16.1.1982. In view of the above said provision under the Scheme, the news paper employees are not entitled to become the members immediately after joining in the employment and they have to necessarily work minimum period of three months continuously or 60 days during a period of three months whichever is less, failing which they are not entitled to become members of the act. 18. Similarly, Para 81 of the EPF scheme deals with special provisions in the case of Cine workers and a special paragraph was incorporated in the EPF scheme which reads as follows: Class of employees entitled and required to join the fund: 1(a) Every cine worker to whom this scheme applies other than an excluded employee, shall be entitled and required to become a member of the fund from the beginning of the month following that in which this paragraph comes into force, if on the date of such come into force he had worked in not less than three feature films with one or more producers. After this paragraph comes into force in film production unit every cine worker thereof, other than an excluded employee who has not become a member already shall also be entitled and required to become a member from the beginning of the month following that in which he completes work in three feature films in that production unit and another such unit to which the Act applies under the same producer or partly in one and partly in the other. 19. It is submitted that the worker in the construction activity are also migrant and they are not working with the same employer and the identification of such workers are very difficult and therefore, the same provision of law which made applicable to the employees of news paper establishments and the cine workers may also be made applicable for the employees working in the construction industry also particularly in view of the above mentioned facts and circumstances 20. For all the reasons mentioned above, it is humbly prayed that the Hon’ble Minister be pleased to issue necessary directions to exempt the employees of construction and infrastructure industry from para 26 of the EPF act by exercising the powers under section 16 (2) of the

Employees provident fund and miscellaneous Provisions Act, 1952 and or consequently insert a similar provision on par with the News paper establishments and Cinema Industry in the EPF scheme, otherwise we will suffer great hardship and irreparable loss. 21. We further respectfully submit that in case of any further clarification with regard to the above said issues, we may be given an opportunity of personal hearing to put forth our suggestions and to produce relevant documents. Thanking you,

Yours faithfully,

B. SEENAIAH

PRESIDENT BUILDERS ’ ASSOCIATION OF INDIA

Meeting on Construction skills and Sector Skill Council

Date and Time: 23rd August 2012, 4-5 pm Location: Conference Room, 11th floor, Air India Building, Nariman Point, Mumbai Attendees: At Annexure Key points of discussion

� Constitution of the Governing Council − Chairman of the Governing Council: Mr AjitGulabchand − The following people were agreed upon as the first members of the Governing Council

o Mr. AjitGulabchand and Mr. S N Subrahmanyan (CFI nominees) o Mr. Seenaiah and Mr. D L Desai (BAI nominees) o Mr. Lalit Kumar Jain and Mr. Shekar Reddy (CREDAI nominees) o Mr V C Verma and Mr. S. Mukundan (NHBF nominees) o Mr. N Hiranandani, Mr PhillieKarkaria and Mr. J Ganguly (addl industry nominees) o 1 nominee from NSDC to be communicated in September o 1 Government nominee from the Planning Commission to be decided by Advisor to PM o 2 technical advisors in the Council (from the skills side) to be decided upon subsequently by

the remaining members of the Governing Council o The CEO to be inducted into the Governing Council as an ex-officio member, with voting

rights

� Scale of the Sector Skill Council – The current envisaged scale of ~11 lakhs over the next 3 years was accepted as a starting target

� Endorsement of SSC − The Members agreed to mandating at least 20% labour certified by CSSCin all construction projects,

by end of Year 3. − The Members agreed to contribute to meet SSC funding requirementsfor first three years (industry

contribution of Rs. 7 crore needed)

� Next steps − Col N B Saxena (L&T),Mr. Siddharth Singh (CFI) and Mr. RajpalArora (BAI) to engage with NSDC

to ensure that the Proposal is presented to the NSDC Board on 27th Sept. − Mr. Gulabchand’s Office to set up a Secretariat to fast track setting up of the SSC as a Section 25

Company and create recruitment policies. In addition, the Office would coordinate with industry associations to get some seconded staff working full-time for the SSC for a minimum of one year, and to fix the date for the next Governing Council meeting.

− L&T to help with finalizing the model and implementation plan for the trainer-training and certification components of the SSC.

− The first Governing Council meeting to especially focus on creating a plan for developing (master) trainers in the sector.

− In addition, the Governing Council to come back to the Advisor to the PM, NCSD with specific industry recommendations/asks on use of Building and Other Construction Workers’ Cess for the SSC and/or training activities in construction

− NSDC would be forwarding MoA/AoA format to Mr Gulabchand’s Secretariat for CSSC Co formation.

LIST OF PARTICIPANTS 1. Mr. S. Ramadorai, Advisor to the Prime Minister, National Council on Skill Development 2. Mr. AjitGulabchand, Chairman, Hindustan Construction Co. and CFI 3. Mr. NiranjanHiranandani, MD, Hiranandani Developers 4. Mr. S. C. Dixit, President, ShapoorjiPallonji Co. 5. Mr. Sumit Banerjee, Vice Chairman, Reliance Cement and CEO, Reliance Infrastructure 6. Mr. P. D. Karkaria, Executive Director, Tata Realty and Infrastructure Ltd. 7. Mr. PrakashTikare, Vice President, Gammon India Ltd. 8. Mr. ArindamBasu, GM (Business Development),Essar Projects 9. Mr. Shakeel Khan, GM – Projects, Raheja Developers Ltd. 10. Mr. B. Seenaiah, President, BAI, BSCPL Infra Ltd. 11. Mr. D Shankarbhai, Trustee, BAI 12. Mr. RajpalArora, Secretary, BAI 13. Mr. V.C. Verma, Oriental Structural Engineers Ltd., President, NHBF 14. Col. SurinderKuda, AshokaBuildcon, Member, NHBF 15. Mr. J. Ganguly, CFI , Chairman - Working Group for Sector Skills Council 16. Mr. Siddharth Singh, Secretary General, CFI 17. Mr. AlokeKhanna, CEO, LokBharti Skilling Solutions (P) Ltd. 18. Mr. Saranjit S. Dhupia, VP, Skills Academy 19. Mr. Basab Banerjee, Head, Standards and QA, NSDC 20. Ms. Anita Rajan, Office of Advisor to PM, National Council on Skill Development 21. Ms. Vidya Bhat, Office of Advisor to PM, National Council on Skill Development

BUILDERS’ ASSOCIATION OF INDIA Managing Committee Meeting Jodhpur – 29th September 2012

Item No.6

List of Centres which have not submitted Audited accounts for the year 2011-12

East ASSAM STATE North Eastern (Tezpur) Centre

West GOA STATE Goa Centre MADHYA PRADESH STATE Indore Centre

South TAMIL NADU STATE Musiri Centre Thiruvannamalai Centre

BUILDERS’ ASSOCIATION OF INDIA Managing Committee Meeting Jodhpur – 29th September 2012

Item No.7

REPORT OF SMT. KALYANI KAR ROY, CHAIRPERSON, LEGAL, ARBITRATION, GRIEVANCES AND PUBLIC RELATIONS COMMITTEE

At the time of entering into a contract, no contractor foresees trouble and the focus is largely on details aspects of the agreement. But it is always advisable for all construction companies to also take a clear look at the Dispute Resolution Clause built into the contract agreement. As because, during the course of execution of the contractual work, the contractors sometimes face hindrances on account of default of the employer or his Engineer, which can retard the progress of the work with the result, the date of completion targeted by the parties at the time of entering into contract, cannot be achieved and thus culminates Disputes. Costly, time consuming business disputes can take a real bite of a contractor’s bottom line. Considering this situation, a viable and effective alternative to litigation, for resolving disputes became an imperative need for the credibility of the legal system. Thus, the Arbitration And Conciliation Act 1906 (8 of 1966) promulgated by the President on January 16, 1996. This new law allows resort to Arbitration by parties for resolution of their disputes in any matter which is arbitrable. Although on the whole, the 1996 Act was well drafted and well intended, for smooth and speedy conduct of proceedings in arbitrations, as well as gives maximum freedom to the parties in all matter, yet, there are certain ailments of arbitration in our country. Following causes are to be looked after:- 1. Apathy to legal practitioners to Arbitration.

2. Lack of faith and confidence of the disputing parties in the intrigity, honesty & impartiality

of the arbitrators.

3. Refusal to include Arbitration Clause in the agreements.

4. High rate of arbitration fees demanded by the arbitrators in adhoc arbitration and indulging in granting free adjournments without valid grounds, to prolong the proceedings.

5. The practice of Government Departments and Public Sector Undertakings appointing their own officials as arbitratot.

REMEDIES 1. Wholehearted support by the Bar Councils of India.

2. A statute to make it obligatory and binding for the contracting parties to include Arbitration

Clause in their contracts / agreements.

3. To prevail upon the Government of India and State Governments to strictly resort to arbitration for settlement of their disputes except in exceptional cases and to maintain Arbitration Cases in lines with the Indian Council of Arbitration (ICA), Internationally recognised Apex Body of our country.

Conclusion: Considering all the above aspect as well as regular exchange of views, suggestions and on the basis of feed back gathered from different sectors of business industry, ICA amended their Rules of Arbitration which have been operative from 08.05.2012. The highlights of amendments in their Rules of Arbitration are as follows:- a) Mandatory time-frame for completion of arbitration proceeding.

b) Submission of pleadings within a prescribed time limit.

c) Hike in Arbitrator’s and administrative fees.

ICA also wrote Ministry of Commerce to recommend various ministers and Government Departments to use their arbitration clause and services of ICA, so that commercial disputes are resolved through the services of the ICA. The Joint Secretary, Ministry of Commerce to Government of India has by his office Memorandum No.37(1)/98-tpd dated 01.06.1999, recommended to all Public Sector Undertakings, Government Departments, etc. to consider the use of ICA arbitration clause in all commercial contracts concluded by them. For the benefit of the members of this Association, Builders’ Association of India can also join hands with ICA, like other apex business organisation, such as, FICCI, FIFO, CII, ASSOCHAM, etc.

Sd/- KALYANI KAR ROY

Chairperson Legal, Arbitration, Grievances & Public Relations Committee

BUILDERS’ ASSOCIATION OF INDIA Managing Committee Meeting Jodhpur – 29th September 2012

Item No.7

Report from Taxation Committee A. Service Tax:-

(i) Pursuant to BAI efforts with the Ministry of Finance, Central Board of Excise, Customs and Service

Tax, Government of India gave following exemptions vide Notification No. 25/2012 Service Tax, New

Delhi, dated 20th June, 2012. Relevant part is reproduced as below:-

12. Services provided to the Government, a local authority or a governmental authority by way of

construction, erection, commissioning, installation, completion, fitting out, repair, maintenance,

renovation, or alteration of -

(a) a civil structure or any other original works meant predominantly for use other than for

commerce, industry, or any other business or profession;

(b) a historical monument, archaeological site or remains of national importance, archaeological

excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and

Remains Act, 1958 (24 of 1958);

(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or

cultural establishment;

(d) canal, dam or other irrigation works;

(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or

disposal; or

(f) a residential complex predominantly meant for self-use or the use of their employees or other

persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;

13. Services provided by way of construction, erection, commissioning, installation, completion, fitting

out, repair, maintenance, renovation, or alteration of,-

(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;

(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru

National Urban Renewal Mission or Rajiv Awaas Yojana;

(c) a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of

1961) and meant predominantly for religious use by general public;

(d) a pollution control or effluent treatment plant, except located as a part of a factory; or

a structure meant for funeral, burial or cremation of deceased;

14. Services by way of construction, erection, commissioning, or installation of original works

pertaining to,-

(a) an airport, port or railways, including monorail or metro;

(b) a single residential unit otherwise than as a part of a residential complex;

(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project

approved by competent authority empowered under the ‘Scheme of Affordable Housing in

Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government

of India;

(d) post- harvest storage infrastructure for agricultural produce including a cold storages for such

purposes; or

(e) mechanized food grain handling system, machinery or equipment for units processing

agricultural produce as food stuff excluding alcoholic beverages;

Residual issue persisted due to last para (3) of the said notification, which reads thus:-

3. This notification shall come into force on the 1st day of July, 2012.

BAI has already representation to the Ministry of Finance and Joint Secretary, TRU for making these said clarification retrospective effect i.e . 1-6-2007.

A1. The value of contract amount, on which service tax is chargeable is governed by notification no. 24/2012 - Service Tax dtd. 6th June, 2012. “2A. Determination of value of service portion in the execution of a works contract.- Subject to the provisions of section 67, the value of service portion in the execution of a works contract , referred to in clause (h) of section 66E of the Act, shall be determined in the following manner, namely:-

(i) Value of service portion in the execution of a works contract shall be equivalent to the gross amount charged for the works contract less the value of property in goods transferred in the execution of the said works contract. Explanation.- For the purposes of this clause,- (a) gross amount charged for the works contract shall not include value added tax or sales tax, as the case may be, paid or payable, if any, on transfer of property in goods involved in the execution of the said works contract; (b) value of works contract service shall include, -

(i) labour charges for execution of the works; (ii) amount paid to a sub-contractor for labour and services; (iii) charges for planning, designing and architect’s fees; (iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract; (v) cost of consumables such as water, electricity, fuel used in the execution of the works contract; (vi) cost of establishment of the contractor relatable to supply of labour and services; (vii) other similar expenses relatable to supply of labour and services; and

(viii) profit earned by the service provider relatable to supply of labour and services;

(c) Where value added tax or sales tax has been paid or payable on the actual value of property in goods transferred in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of the value of service portion in the execution of works contract under this clause. (ii) Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:-

(A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract; (B) in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, service tax shall be payable on seventy percent. of the total amount charged for the works contract; (C) in case of other works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property , service tax shall be payable on sixty per cent. of the total amount charged for the works contract; Explanation 1.- For the purposes of this rule,- (a) “original works” means- (i) all new constructions; (ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; (iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;

(d) “total amount” means the sum total of the gross amount charged for the works contract and the fair market value of all goods and services supplied in or in relation to the execution of the works contract, whether or not supplied under the same contract or any other contract, after deducting- (i) the amount charged for such goods or services, if any; and (ii) the value added tax or sales tax, if any, levied thereon: Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

A2. SERVICE TAX ON MANAGEMENT , MAINTENANCE AND REPAIR OF ROADS. Service Tax on works contracts was introduced with effect from 1-6-2007. Road sector amongst few others was exempted from levy of service tax from beginning i.e. 1-6-2007. However field formations insisted upon levy of service TAX on MANAGEMENT, MAINTENANCE AND REPAIRS. BAI protested against this levy on plea that once entire sector is exempted, there is no propriety in taxing management, maintenance and repair. Government vide notification No. 24/2009-Service Tax dated 27-7-2009 exempted management, maintenance and repair with effect from 27-7-2009, leaving intervening period from 1-6-2007 to 27-7-2009 again open to assessing authorities. After vigorous follow-up with the department, this period is also

exempted from levy of service tax in respect of management, maintenance and repairs giving substantial relief to all road contractors, whether our members or not. A3. Rate of Taxation has been clarified vide circular Circular No. 158/9/ 2012 – ST dated 8th May, 2012.

1. The rate of service tax has been restored to 12% w.e.f. 1st April 2012. Representations have been received requesting clarification on the rate of tax applicable wherein invoices were raised before 1st April 2012 and the payments shall be after 1st April 2012. Clarification has been requested in case of the 8 specified services provided by individuals or proprietary firms or partnership firms, to which Rule 7 of Point of Taxation Rules 2011 was applicable and services on which tax is paid under reverse charge.

2. The rate of service tax prevalent on the date when the point of taxation occurs is rate of service tax applicable on any taxable service. In case of the 8 specified services and services wherein tax is required to be paid on reverse charge by the service receiver the point of taxation is the date of payment. Circular No 154/5/2012 – ST dated 28th March 2012 has also clarified the same. Thus in case of such 8 specified services provided by individuals or proprietary firms or partnership firms and in case of services wherein tax is required to be paid on reverse charge by the service receiver, if the payment is received or made, as the case maybe, on or after 1st April 2012, the service tax needs to be paid @12%.

3. The invoices issued before 1st April 2012 may reflect the previous rate of tax (10% and cess). In case of need, supplementary invoices may be issued to reflect the new rate of tax (12% and cess) and recover the differential amount. In case of reverse charge the service receiver pays the tax and takes the credit on the basis of the tax payment challan. Cenvat credit can be availed on such supplementary invoices and tax payment challans, subject to other restrictions and conditions as provided in the Cenvat Credit Rules 2004.

A4. Composition rate on works contracts- This composition rate on works contracts has been increased from 4 to 4.8% on value of contract in commensurate with service tax increase from 10.3% to 12.36%. A5. Point of taxation: Clarification on Point of Taxation Rules has come from circular Circular No.154/5/ 2012 – ST dated 28th March, 2012.

1. Notification No.4/2012 - Service Tax dated the 17th March 2012 has amended the

Point of Taxation Rules 2011 w.e.f. 1st April 2012, inter- alia, amending Rule 7 which

applied to individuals or proprietary firms or partnership firms providing taxable

services referred to in sub-clauses (g), (p), (q), (s), (t), (u), (za) and (zzzzm) of clause

(105) of section 65 of the Finance Act, 1994. Rule 7 determined the point of taxation

in such cases as the date of receipt of payment. The provisions have been amended

both in the Point of Taxation Rules 2011 and the Service Tax Rules 1994 such that

from 1st April 2012 the payment of tax shall be allowed to be deferred till the receipt

of payment upto a value of Rs 50 lakhs of taxable services. The facility has been

granted to all individuals and partnership firms, irrespective of the description of

service, whose turnover of taxable services is fifty lakh rupees or less in the previous

financial year.

2. Representations have been received, in respect of the specified eight services,

requesting clarification on determination of point of taxation in respect of invoices

issued on or before 31st March 2012 where the payment has not been received before

1st April 2012.

3. The issue has been examined. For invoices issued on or before 31st March 2012, the

point of taxation shall continue to be governed by the Rule 7 as it stands till the said

date. Thus in respect of invoices issued on or before 31st March 2012 the point of

taxation shall be the date of payment.

A6. Liability of quantum between service provider and service receiver:- Notification No.15/2012-Service Tax dated 17-3-2012 on extent of service tax payable (II) the extent of service tax payable by the person who receives the service and the person who provides the service for the taxable services specified in (I) shall be as specified in the following Table, namely:-

8. In respect of services provided or agreed to be provided by way of supply of manpower for any purpose

25% 75 %

9. in respect of services provided or agreed to be provided by way of works contract

50% 50%

A7. Writ Tax no. 568 of 2011 – Builders Association if India vs Union of India and others - This Writ

challenging constitutional validity of service tax on works contracts is still pending before Hon’ble High

Court of Judicature at Allahabad.

B. Composition Scheme under UP VAT ACT, 2008:- UP VAT Act, 2008 became operative in the state of U P from 1-1-2008 and against BAI representations, Govt. of U P came with compounding scheme on 9-6-2009, wherein rate of compounding was 2% of turn-over with rider that material imported from outside the state shall not exceed 5% of contact value. This rate of compounding was enhanced to 4% vide G.O. dated 30th December, 2010 unilaterally and arbitrarily by Govt. of U.P. without assigning any reason. BAI made representations to Principal Secretary Tax & Registration as well as Commissioner, Commercial Tax U.P., but it went all In vain. Disappointed by no-response, BAI filed writ (TAX) 1496 of 2011 against Govt. of U P on 11-10-2011 and got an interim stay on 13th October 2011 valid till further orders. With final disposal of case, all interim orders will be void and in-fructuous and all contractors are bound to pay enhanced rate from 1-4-2011 and this liability shall run in crores. The only remedy to save ourselves from this additional burden is to file an APPEAL in Apex Court within 90 days from 6-8-2012. This issue needs to be decided by HQ.

C. Labour Cess:-

There is nothing more to add except that this labour cess is to be paid irrespective of who pays. Efforts are required so that in Government Contracts, this cess is paid by the Government directly and thus budgetary provisions are made and labour cess is included in estimate of project. A case has been filed in Allahabad High Court against LIC of India praying that in contracts prior to 4-2-2009 (date of notification in UP, labour cess deducted from bills be reimbursed to the contractor. Opinion and view of court will be clear once case comes for hearing. D. Stamp Papers for Contract Agreements:-

As reported earlier, BAI is an intervener and impleader in appeal, filed by Govt. of U.P. (Govt. of U P vs Strong Construction Co. Allahabad and others) against Allahabad HC order (2005 RD Vol. 98 Page 682 -Strong Construction Co. Vs State of U P). Matter is pending for being taken up by Apex court. E.Entry Tax:-

No further developments on this issue.

D. C. AWASTHI

Chairman Taxation, Royalty, Entry Tax,

Direct and Indirect Tax Committee Date: 5-9-2012

BUILDERS’ ASSOCIATION OF INDIA Managing Committee Meeting Jodhpur – 29th September 2012

Item No.7

REPORT OF SHRI K.K. TAPARIA, CHAIRMAN, MECHANISATION COMMITTEE

In continuous pursuit of Mechanisation:

A. Following actions were planned during current quarter.

1. In the present scenario the construction industry is rapidly changing the dimensions from manual to mechanized construction due to labor shortage and other factors, EQUIPMENT CONSULTANT can be the best bond and single point of contact between the manufacturers and the project executors. A presentation of ‘Equipment Consultant’ on the platform given in the 4th Equipment India Conference in New Delhi this month is attached for your reference. The conference was attended by wide range of Infrastructure, Real Estate, Construction Equipment Manufacturers and others. A very good response was received on this concept at this platform and we are working for training and development of Equipment Consultant at Universal Knowledge Centre.

2. Publication on an article on the subject ‘Impact of Mechanisation on Cement Consumption’.

3. Launch of software for Real Estate to analyze the requirement of Universal construction

machinery and equipment for real estate and commercial project segment especially for

concreting and material handling group. These also helpful customers to know that what he

should be procure for effective mechanization to complete the job in time and with good

quality.

4. Development of Special Type of Equipments – Light weight concrete making machines.

5. Promotion of RMC at Site.

6. Promotion of renting of equipments.

7. Interaction with MIT College of Management.

8. Interaction with B. G. Shirke Group for Mechanisation in Construction.

9. Interaction with Mr. Dharmesh Awasthi, Vice President(North), Builders’ Association of India. B. IFAWPCA Activities : Attended Meeting of The International Federation of Asian and

Western Pacific Contractors’ Associations, (IFAWPCA) and interaction with various construction equipment manufacturers alongwith Mr. M. V. Antony, General Secy. IFAWPCA.

1. Director, Manitowoc Cranes India

2. Managing Director, Aquarius Engineers Pvt. Ltd.

3. Managing Director, ElectroMech Material Handling Systems (India) Pvt. Ltd.

4. Managing Director, Hyundai Construction Equipments Pvt. Ltd.

5. Marketing Head, Sany Heavy Industry India Pvt. Ltd.

6. General Manager, Atlas Copco India Ltd., He has forwarded the proposal to their Kochi Office

C. Interaction with other associations :

1. Interaction with Concrete Equipment Manufacturers ‘Indian Construction Equipment Manufacturers’ Association (ICEMA) formerly IECIAL for more improvement in mechanization and inputs from manufacturers for mechanization.

2. Presentation in Marhatta Chamber of Commerce and Industries, Agriculture and meeting with

Director General, MCCIA for formation of a Construction Equipment Group in MCCIA.

3. During the Concrete Day on 7th Sept., 2012 had interaction with Mr. V. B. Gadgil, Chief Executive & Managing Director, L&T Metro Rail (Hyderabad) Limited and discussed about quality assurance in mechanization in Metro and other L&T Projects alongwith Mr. Ujwal Kunte., Director, Durocrete Construction Quality Rating Agency Pvt. Ltd.

4. Discussed about mechanization with Senior person in Mahindra and Mahindra

Ltd.(Construction Equipment Sector).

Sd/-

K. K. TAPARIA Chairman, Mechanisation Committee

BUILDERS’ ASSOCIATION OF INDIA General Council Meeting

Jodhpur – 29th September 2012 Item No.5

Report of Shri P. Mohan Reddy, State Chairman, Andhra Pradesh

After the last Managing Committee / General Council meeting at Chennai, We have written several letters to the Govt. Official on emphazing the need to consider then favourable. On EPC contractors we have organized a press conference on 4-8-2012 to appraise the government for delays in giving various sanctions and other issues being faced by the contractors community. We have sent a Cheque of Rs 2,00,000/- towards Legal Fund to BAI Headquarter. We are making efforts to contribute some more amounts towards legal fund. We have written letter to various officials on adoption of VAT @5% in place of 4% and the government has issued favourable orders in this regard. We have organized the 3rd Managing Committee of BAI at Hyderabad on 22-8-2012 at Novotel Airport Hotel successfully. I have attended Executive Committee Meeting at Hyderabad, Nalgonda, Karimnagar, Nizamabad and Adilabad Centres. I have co-ordinated with all the Centres to see that the audit report of all the Centres of A.P is sent within the time. We are making every effort to increase the strength of membership of the centres and also planning to add some more Centres. We had series of meetings with Directors of Mines and Principal Secretary Mines & Minerals regarding replacement of natural sand by manufactured sand in using all construction activity in A.P. We had a meeting with Chief Minister of AP and submitted a memorandum regarding bottlenecks in solving the escalation issue in Jalayagnam projects. The Chief Minister has made arrangements by appointing a Sub-committee to look into the grievances of contractors regarding price escalation of the labour, sand, metal and other materials involved in construction activity and sub-committee has already conducted one meeting and we are expecting positive results in solving the escalation issue by the sub-committee.

Sd/- P. MOHAN REDDY

State Chairman, Andhra Pradesh

BUILDERS’ ASSOCIATION OF INDIA

General Council Meeting Jodhpur – 29th September 2012

Item No.5

Report of Shri Alex P. Cyriac, State Chairman, Kerala

BAI, Kerala has taken every steps to promote our association at every levels and has been very active. I hereby present the report of the activities of the Builders’ Association of India, Kerala State from the last MC meeting upto this meeting.

We, as per the instructions from the Headquarters, have taken initiatives to start new Centres, conducting programs, Seminars, taken up issues and did our best to give publicity for our activities.

Cement issue: A letter was sent to all MPs & MLAs of our State to request to initiate steps to control the price hike of cement, enclosed with the submission of Anwar Sadath MLA on this subject presented in the Monsoon Session of Kerala Legislative Assembly. In reply to Shri.Anwar Sadath’s submission The Chief Minister of Kerala, Shri.Oomman Chandy said he will look into the issue and will take up the matter with Central Government. And also a letter was send to the Commerce Minister of India to request him for the duty free import of cement from the neighbouring countries.

Installation of Chairmen – Angamali & Aluva: The Chairmen of new Centres, Angamali & Aluva, were installed on 14th July at 6.30 P.M. Shri.M.D.Unnikrishnan (Chairman ,Thripunithura Centre).presided over the function and Shri.Alex P Cyriac, the State Chairman installed the Chairmen. Aluva MLA Sri.Anwar Sadath distributed certificates to members of Anagmali & Aluva. Shri. Cherian Varkey delivered the keynote address. BAI national and state leaders participated in the programme.

BAI meeting Kollam Centre: A Meeting was held for the foundation of Kollam Ccntre on 14.08.2012 at 6.30 P.M. in Quilon beach hotel. Twentyfive members were present on the meeting. Mr. Sajikumar (State Chairman’s Representative) welcomed the meeting. Presidential address was done by Mr. Alex P Cyriac, the State Chairman, Kerala. Mr. T. Padmarajan (State Chairman, Kerala Builders Association) talked about his experience in BAI, and Mr. Alexander Vaidyan (BAI, Trivandrum Centre Chairman) felicitated the meeting. Capt.George Thomas, the Hon. State Secretary delivered vote of thanks and the meeting decided to complete the formalities for centre formation within 30 days.

Seminar on Service Tax

A Seminar on Service Tax was held on 6th August 2012 from 9.30 A.M. at BAI Chamber, Cochin. Mr. Natarajan from Swamy Associates, Chennai presented latest amendments and notifications to Service Tax rules. There was an interactive session with Asst. Sales Tax Commissioner, Mr. Aneesh Rajan for clarifying doubts on the latest developments in Service Tax on construction industry from the departments perspective. Mr. Shaji Mathew, Co-Chairman

for Committee on Taxation thanked the speakers. Also the State level functional committee on taxes prepared and submitted a memorandum to Finance Minister of Kerala highlighting the problem faced by contractors.

Skill Development Workshop: A Skill Development Workshop was conducted at Mar Sleeva Hospital, Pala on 9th August 2012 at 9.00 A.M. Dr. Vivish Thomas, the Chairman of State level skill development programme welcomed the gathering and Mr. Alex P Cyriac, State Chairman, Kerala presided over the function. The programme was inaugurated by Mr. Mons Joseph MLA. Er. John Paul, Immediate Past State Chairman felicitated the programme. Mr.Jimmy George, Centre Chairman, Kottayam delivered vote of thanks. The sessions were conducted by Mr. SRC Nair (GM, Kunnel Engineers) and Mr. M.M.Mohandas, Past State Chairman. Kerala.

PWD Committee: Discussions on amendments required in newly published PWD manual is going on with the PWD officials. Shri.Gibu Mathew, Chairman PWD/Railways Committee and Shri Jojy Joseph, former District President of all Kerala Contractors Association meets with the Committee members regularly. The suggestions of the committee are forwarded to the PWD Minister.

We are trying to do our best to increase BAI’s strength and conduct programmes on various subjects in different regions. After the opening of Angamali & Aluva Centres, we have conducted first meeting of Quilon Centre. Further we take initiatives to open new Centres at Palakkad, Malappuram, Kasargode, Guruvayoor etc.

DOCUMENTS ENCLOSED:

1. Letter to MPs &MLAs regarding price hike of cement.

2. Submission of Anwar Sadath MLA in Kerala Legislative Assembly

Sd/- ALEX P. CYRIAC

State Chairman, Kerala

To The Hon’ble Members of Parliament The Hon’ble Members of Kerala Legislative Assembly Sirs, Builders Association of India (BAI), is the All India apex body of Engineering Construction Contractors and Real Estate Companies. Founded in 1941, it has more than 13,000 business entities as members through 130 plus Centres (Branches) throughout the country. Regional associations affiliated to BAI form indirect membership of another 50,000. BAI is affiliated to International Federation of Asian and Western Pacific Contractors’ Association, (IFAWPCA). The President of BAI is a member of the Steering Committee for Construction, constituted by Planning Commission of India for the 12th Five year plan. The President of BAI is also appointed as the Chairman of two working groups namely, Procurement and the Dispute Resolution under the Planning Commission of India. Most of the State level associations in different States representing the different wings of the Construction Industry are the affiliated members of BAI. The State level associations like All Kerala Government Contractors’ Association, Kerala Government Contractors’ Association etc. are affiliated members from Kerala. So, as recognised by the Central Government, the BAI is representing the Construction Industry in the Country. In Kerala, BAI has 11 Centres in different districts with 584 members and most of the mainstream registered contractors working for the Kerala Public Works and Irrigation Departments are the members of this association. Cement industries’ involvement in unfair trade practice is evident in Enquiry No: RPTE 99/1990 decreed on 28th November 2006 by the Monopolies and Restrictive Trade Practice Commission’s cease and desist order. The Hon’ble commission again in Enquiry No: RTPE 21/2001 decreed on 29th February 2008 observed that “cement companies are guilty of forming cartel and issued to cease and desist order. The MRTP commission also directed them to file the affidavit with effect that they won’t do cartelisation again”. On 20th June 2012, the Hon’ble Competition Commission of India (CCI), in a case No. 29/2010 filed by the Builders Association of India, again confirmed cartelisation and manipulation of sale price of cement by cement companies, and imposed a fine amounting to Rs.6,306.59 crores on cement companies and Rs. 73 lakhs on Cement Manufacturers Association (CMA). The Builders’ Association of India had already spent lakhs of rupees in fighting the case before the Competition Commission of India and won the case. This, our organisation had done as part of its social commitment and for the economy as a whole. Being responsible citizens, we are going to challenge the order of the Commission in the Central Tribunal on the ground that the Penalty imposed on the companies is much less compared to existing provisions of the law. It should have been at least 6 times the actual penalty imposed on them (i.e., 6306.59x6=37,839.54 Crores). Cement constitutes about 13% of the total cost of buildings, and 5-30% of roads, sewage, dams etc. Housing sector consumes 60% of the total cement production, infrastructure consumes 20%. Thus it follows that the government and the common man are the victims of the looting cement

manufacturers. The increase in prices of cement is a big set-back to the ongoing infrastructure development projects of the country as a whole and will definitely affect the country’s GDP growth. This decision of the cement companies will affect the common man in particular who is going to construct a house for his own or who intends to purchase a flat/villa through a promoter. The contractor in fact is also affected by the increase but limited to their quoted or ongoing projects. They would definitely forced to quote higher price next time according to the market trend. The promoters will increase their price whereby the common man, the end-user will actually be affected. We are also requesting the Government of India to remove the import duty of Cement so that cement can be imported at a reasonable price which could prevent the Cement Companies from looting the government and the common man in general. The laxity on the part of Government and Judiciary compelled the Builders Association of India even initiate steps in establishing its own cement factory for catering the requirements of our members. In this regard, we have prepared a Detailed Project Report (DPR) by an expert consultant. As per this project report, the cost of cement (ex-works) could be around Rs. 187/bag including all taxes and duties. The transportation cost for a distance 300-400 km could be in the range of Rs.25-35/bag in addition. Kerala Government also can take steps like giving subsidised cement to weaker sections of society for constructing residential houses form public sector company like Malabar Cements. Thereby the state can be a role model to other states and to the country as a whole. We are also planning public protests across the country to gather support to fight against this anti social lobby. In the above circumstances, we expect a favourable intervention urgently from the people’s representatives and their moral support for a noble cause. We are enclosing a copy of the order of Competition Commission of India as aforesaid. In the Kerala Legislative Assembly, Sri. Anwar Sadath, MLA made a submission on the subject. Copy of the submission is also enclosed for kind perusal. Thanking You, Yours faithfully, Sd/- Alex P. Cyriac State Chairman, Kerala Builders Association of India

According to Rule 304 a submission by Shri Anwar Sadath MLA of Alwaye in Kerala Assembly dated on 19/07/2012, he stated that the big time cement companies hike the prices every now and then and due to this construction industry is in crisis. The price for cement bag which was Rs 180 is now more than Rs 360. The fact is that these big cement companies have reduced the production cement and hiked the price. In Kerala most houses build-up area is 500 sq.ft to 1000 sq.ft and they are relatively small. The people find a tough time to build their houses due to price hike. He requested the government to control the price and proposed a central government authority to be formed to control cement prices. In reply to Shri.Anwar’s submission, The Chief Minister of Kerala, Shri Umman Chandy said the prices could not be controlled now. He agreed that he will take up the matter with Central Government.

BUILDERS’ ASSOCIATION OF INDIA General Council Meeting

Jodhpur – 29th September 2012 Item No.5

Report of Shri Mu Moahan, State Chairman, Tamil Nadu & Puducherry

13.07.2012 A press meet was organized by Builders Association of India, Southern Centre in Chennai to highlight the price increase of Construction materials particularly cement. Mr. S. Ayyanathan welcomed the gatthering and addressed regarding construction materials increase in short. Mr. R. Radhakrishnan , All India Past President said that even after levying penalty of Rs.6300 crores on 11 cement manufacturers by the competition commission of India, still the price of the cement is high. This press meet is meant to take to the attention of State and Central Government regarding price increase of cements and also insist to form a Regulatory Authority Board to monitor cement price. Even efforts are on to approach the Prime Minister of India through Mr. B. Seenaiah, President, BAI. Er. Maohanraj – State President, All Civil Engineer Association of Tamil Nadu & Puducherry informed that no political party has commented on the penalty to cement manufacturers by the Competition Commission of India including communist party. While the political parties are addressing all the grievances, it is surprising to note that they are keeping silent at a time when the construction industry is being effected badly due to cement price hike. Mr. Moahan, State Chairman, said that a memorandum will be submitted to the Chief Minister on price hike. He also said that next to China India is the only country in the world having capacity of cement production. But the cement manufacturers are not producing the cement to the full capacity. It was decided to insist State & Central Governments to form a Regulatory Authority Board and also relax import duty on cement to bring down the cement price in the market. The hunger strike was widely covered by media (Televisions and News papers) 28.07.2012 Second State level meeting was organized by Pudukottai Centre – BAI. Around 200 MC/GC members participated with great involvement. In this meeting, besides many other important discussion, we had also discussed about Standard Contract Document, the important need for the function of the consortium. It has been enlighted by the well known consultant Sri. A.V. Rangaraju. We congratulated Shri. Shankbai Desai for his continuous efforts, which made the Competition Commission of India to levy penalty on cement manufacturers.

During the meeting it was decided to protest the price increase by conducting one day hunger strike and stopping construction work at the sites in all over Tamil Nadu. Regarding IFAWPCA Convention majority of the members in the 2nd State level meeting felt that the delegate fees should be Rs.10,000/- to our members since the convention is being hosted by BAI in India. During the meeting all the MC/GC members appreciated Mr. B. Seenaiah, President, BAI for his immediate response on the sand issue raised at South Zone meeting, Mettupalayam, he has also written letters to all Parliament members regarding cement price hike. The members felt they are very proud of having such a dynamic leader serving for the fraternity. The hospitality including food arrangements and fellowship with their personal touch was amazing. All the delegates appreciated the centre.

21.08.2012

As decided in the second state level meeting one day hunger strike was conducted along

with all other construction Association. We brought to light and created awareness among

common public about the cement manufacturers cartel and their unjustified profit of

cement sales. And also the penalty of Rs. 6307 crores le vied by competition commission

of India on 11 cement manufacturers. This was highlighted through news papers &

Televisions.

Further, we have insisted to form a Regularity Authority Board to monitor cement price

and importance of the same.

Each and every BAI Centres in Tamil Nadu with great efforts arranged the hunger strike

along with Local Associations in a very appreciable manner which shown the strength

and unity among the builders. This one day agitation which held all over Tamil Nadu was

well appreciated by all category of people.

Sd/-

MU. MOAHAN

State Chairman, Tamil Nadu & Puducherry

BUILDERS’ ASSOCIATION OF INDIA General Council Meeting

Jodhpur – 29th September 2012 Item No.5

REPORT OF SHRI. MANOJ POTEKAR, STATE CHAIRMAN, MAHA RASHTRA, BAI. I have co – ordinate with all the Centres to see that the audit report of all the Centres of Maharashtra is sent within the time. We are making every effort to increase the strength of membership of the centres and also planning to add some more Centres. As the MVAT issue was raised by the Maharashtra Government by issuing Trade Circular 14T for MVAT for builders and developers. I took the press conference at Pune on 28.08.2012 at Shramik Patrakar Bhavan which was attend by most of the leading Newspapers representatives and wide coverage received next day in local and English News papers & News Channels. After that I called emergency 2nd State Level Meeting for discussion on MVAT issue at pune the invitations were sent to Centre Chairmen and BAI Members by Mail and SMS in one day . The 2nd State Level Meeting was held on August 30, 2012 at Firodia Hall, The Institution of Engineers, Shivajinagar, Pune. Mr Ranjeet More – BAI Vice President (West Zone), Mr. Manoj Potekar – BAI State Chairman, Maharashtra, Mr. D. L Shankarbhai – BAI Trustee, Mr. Jaideep Raje, Chairman, Pune Centre, Mr. Nambiar, Mr. Mahesh Mirani BAI Pune Hon. Secretary and other dignitaries address the meeting. The meeting was specially called for single point agenda i.e. MVAT subject. The Chairman took the point for discussion. He explained to the house, action he has taken so far to, highlight the MVAT issue. I formed a Special Committee with the advice of the Vice President (West Zone). To work towards solving MVAT issue with the Government. Members of this committee are : Mr. Ranjeet More – Vice President (West Zone) Mr. Manoj Potekar – State Chairman (Maharashtra) Mr. Neelkanth S Joshi – GC Member (BAI Pune Centre) Mr. Sanjay Sanghvi – GC Member (BAI Baramati Centre) Mr. Vijay Devi – GC Member (BAI Satara Centre) Mr. J Thakar – Chairman (BAI Satara Centre) Mr. Vakharia - GC Member (BAI Satara Centre) As per the first meeting of committee on MVAT held at Pune on 30/08/2012 and the action plan was decided, accordingly committee members held meeting in Pune on 03/09/2012 with prominent consultants for which details are as follows:

As refer by Mr. Anil Vakharia C.A the elder brother of our member Mr. Rahul Vakharia, committee had meeting with senior Advocate Mr. S. A Gundecha who gave all the minor & major details regarding MVAT matter. He agreed and handed legal draft letter of MVAT demanding to the flat holders. He also stated that BAI should not file any suit regarding MVAT at this stage because most senior advocates representing other associations, have already presented their says with all aspects to the Hon. Supreme Court He also stated BAI may intervene with the matter in Supreme Court while hearing will be in progress. He advice that as per judgement of Hon. Supreme Court dated 28/03/2012 member should register with sales tax department & be prepared with the calculations for submit the returns with the minimum amount. Same time he also advice that return should be submitted under protest and also agreed to handover the draft for the same to us within 15 days. After the discussion with Senior Advocate Mr. S. A Gundecha on above points we thanked him and then as decided Mr. Neelkanth Joshi had arranged the meeting with senior tax consultant Mr. Govind Patwardhan, we had a long discussion with him details are as below: Mr. Govind Patwardhan explained in details all the aspects of current MVAT matter. He suggested that registration should be done and be prepare with calculations for submitting the returns with the minimum amount. He also clarified difference for paying of stamp duty on sales deed is different issue which cannot be affected on MVAT matter. This point was also clarified by senior Advocate Mr. S. A Gundecha. He stated that if we builder or developer will work out with option given by Maharashtra Sales Tax Department; the VAT percentage will be very minimal. He also agreed for the presentation to BAI members on MVAT matter and Calculation method for the submission of VAT return within next 15 days. The members present for the meeting were Mr. Manoj Potekar, Mr. Balasaheb Thackar, Mr. Neelkanth Joshi, Mr. Sanjay Sanghavi, Mr. Vijay Devi, Mr Rahul Vakharia, Mr. Sanjay Apte, representative of Ranjeet More. I have appeal Maharashtra Deputy Chief Minister and Finance Minister Shri. Ajit Pawar to arrange the meeting for talks on MVAT issue with BAI. Thank You,

Sd/- MANOJ POTEKAR

STATE CHAIRMAN, MAHARASHTRA

Delhi Office: D1/203, Aashirwad Complex, Green Park Main, New Delhi 110 016 ✆ 26568763 E-mail: baidelhi16@gmail.com

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