Negligent Labour Dept loses Rs 413 cr cess to I-T dept

The Labour Department is yet to recover Rs 413.08 crore that the income tax department attached from the Karnataka Building and other Construction Workers’ Welfare Board, almost a year ago.

Dismissing allegations of misappropriation of funds, Labour Minister Venkataramanappa claimed that the board had landed in the soup for no fault of its.

Following a departmental enquiry and a Public Accounts Committee report a few months ago, it came to light that the board could have prevented the attachment had the officials not been negligent.

The board collects 1% cess on the total cost of construction activities in the state, and a fund is created towards social security benefits to construction workers in the state.

However, due to negligence by officials, and due to pooling of funds in one bank (Canara Bank), I-T officials considered around Rs 1,000 crore as receipts, and issued a notice to it on September 22, 2017.

Instead of acting swiftly, board officials, including the labour secretary, slept over the matter.

“Since the board’s reply reached only on the last date, penalty provisions were initiated against the board during December 2017. Negligence by officials prompted the I-T department to make an Assessment Order for 2015-16, on December 29, 2017 for Rs 413 crore to be treated as tax against the receipts of Rs 1,000 crore. The I-T department issued a notice to Canara Bank on February 28 to make payments of Rs 413 crore as the attachment,” the report adds.

Replying to BJP MLC Ravi Kumar in the Council on Wednesday, Venkataramanappa blamed I-T authorities.

“The I-T department has wrongly considered the board’s annual cess as ‘income’ and attached Rs 413.08 crore. The board, however, has taken all necessary steps to get back the amount. Also, the board has not incurred any losses because of this.”

Ravi Kumar had charged that the Rs 450 crore was misused due to inappropriate maintenance of the Labour Welfare Fund. Stating that the money had been squandered due to negligence by senior officials, Kumar demanded a departmental inquiry.

The minister said the board had filed a petition under Section 10(46) of the Income Tax Act, requesting an exemption from the applicability of the Act. “All efforts have been made by the board to get back the amount. The board has not incurred any loss,” he reiterated.