The main legal point established in the judgment is that HRA and OTA are not included in basic wages under the EPF Act, and there is no enabling power for the Commissioner to adopt notified minimum wages for calculating EPF contributions.

ORDER :

The petitioner company is an establishment covered under Section 1(3)(b) of The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as -the EPF Act-). When the second respondent had alleged that the establishment had failed to remit the Provident Fund and insurance contribution dues for the period from May, 2010 to November, 2012, an enquiry was initiated under Section 7A of the EPF Act on 01.02.2012. In the enquiry, it was found that the establishment was remitting the Provident Fund contributions only on the basic component of the wages from 04/2010 and the wages have been split into Basic, House Rent Allowance (HRA) and Over Time Allowance (OTA), which do not attract Employees Provident Fund (EPF) contributions.

2. Alleging that the establishment was avoiding liability towards the contributions by making contributions on splitting up the wages into Basic and HRA components, the second respondent herein had examined the rate of minimum wages for hospital, sweet making and confectioneries, nursing home, shop and commercial establishment, in which, the petitioners were deploying their manpower and by applying the minimum wages notified to such establishments, had determined the contributions payable by the establishment on the basis of the notified minimum wages and sought for payment of the balance of the EPF contributions, through the impugned order dated 13.08.2013. The appeal filed by the petitioner before the Employees- Provident Fund Appellate Tribunal was also rejected, through an order dated 08.01.2014, by holding that, splitting up of the minimum wages into Basic Wage, Dearness Allowance and OTA was invalid, since the State Government had notified the minimum wages for the concerned establishments. Challenging these orders, the present writ petition has been filed.

3. The learned counsel for the petitioner submitted that the definition of Basic Wages under Section 2(b) read with Section 6 of the EPF Act does not include HRA and OTA and therefore, the second respondent herein had exceeded his jurisdiction in directing the petitioner to pay the contributions on such allowances also. He further submitted that placing reliance on the minimum wages notified by the Government to the establishments, where their manpower were engaged and deriving at the EPF contributions, is impermissible in the absence of any provisions. In support of such a claim, the learned counsel placed reliance on a judgement of the Division Bench of the High Court of Punjab and Haryana in the case of Assistant Provident Fund Commissioner vs. M/s.G4S Security Services (India) Ltd. And another reported in 2011 SCC OnLine P&H 8362.

4. Per contra, the learned Senior Standing Counsel appearing for the second respondent submitted that the establishment has been remitting EPF contributions only on the basic component of wages, in order to avoid their liability towards contributions and therefore, the Enforcement Officer had examined the rate of minimum wages applicable to the establishments where the petitioner was deploying their manpower and arrived at the EPF contributions to be made. Since the establishment requires to comply with the Labour Laws, including the Minimum Wages Act, there are no infirmities in the order passed by the second respondent under Section 7A of the EPF Act, as well as the order-in-appeal.

5. I have given careful consideration to the submissions made by the respective counsels.

6. Section 2(b) of the EPF Act defines the term “basic wages”, which contains exceptions and does not include such wages which are not earned in accordance with the term -contract of employment-. The Hon-ble Supreme Court of India, in the case of Regional Provident Fund Commissioner (II), West Bengal vs. Vivekananda Vidyamandir and others reported in (2020) 17 SCC 643, had dealt with the definition of “basic wages” in the following manner:-

“11. The common submission on behalf of the appellants in the remaining appeals