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Section 101: Interest payable for delay in payment of cess

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VIII: Social Security and Cess for Building Workers
Competent Labour Forum
Act No. 36 of 2020
Section 100 All 163 Sections of Code on Social Security, 2020 Section 102

Legal Commentary & Landmark Judgments: Section 101

Section 101 of the Code on Social Security, 2020 imposes mandatory statutory interest on employers who fail to deposit the building workers' welfare cess within the prescribed statutory timeframe, establishing an automatic, non-discretionary financial charge at the rate of one per cent per month.

  • Automatic Accrual of Interest on Default: Mandates that if an employer fails to pay any amount of cess payable under Section 100 within the time specified in the order of assessment or statutory rules, such employer shall be liable to pay interest on the amount unpaid at the rate of one per cent for every month or part of a month from the date on which such payment was due until the date of actual payment.
  • Compensatory and Non-Discretionary Nature of Levy: Interest under Section 101 operates as a compensatory statutory levy for the deprivation of welfare funds, accruing automatically by operation of law without requiring proof of willful default or mala fides.
  • Calculation Methodology and Compounding Prohibition: Interest is calculated on simple monthly terms on the outstanding principal cess sum; statutory rules do not authorize the assessing officer to compound interest upon interest unless specifically authorized by statute.
  • Recovery as Co-Extensive Arrear of Cess: Statutorily merges the accrued interest with the principal cess debt, making it recoverable through identical summary procedures as arrears of land revenue under Section 99.
Key Landmark Precedents:
  • Pratibha Processors v. Union of India (1996) 11 SCC 101: The Supreme Court laid down that interest on delayed tax or cess is purely compensatory in character, arising automatically upon default to compensate the revenue for the withholding of funds.
  • Central Bank of India v. Ravindra (2002) 1 SCC 367: The Constitution Bench affirmed that liability to pay interest arises as an accessory obligation following the principal debt, and statutory interest clauses must be applied strictly in accordance with their terms.
  • Goetze (India) Ltd. v. Employees' State Insurance Corp. (2008) 8 SCC 705: Held that statutory interest provisions under social welfare legislation are mandatory and cannot be waived, reduced, or modified by judicial tribunals in the absence of express statutory waiver powers.
Courtroom Practice & Strategic Litigation Guidance:

Construction CFOs and project accountants must track the statutory due dates for cess payment following building plan sanction or running account (RA) bill clearance. When an assessment order is received, never withhold undisputed cess amounts during appeal; deposit the principal cess immediately to halt the continuous 1% monthly interest accrual. If an assessment is challenged, seek an interim stay from the appellate authority under Section 103 while demonstrating that the principal sum has been deposited.

Section 100 All 163 Sections of Code on Social Security, 2020 Section 102