IMPORTANT POINT
Basic wage does not include amounts received for leave encashment.

S.K. Gangele, J.—Petitioner Company has filed this petition against the order dated 9.3.2011, Annexure Pl passed by Employees Provident Fund Appellate Tribunal and the order dated 22.4.2008, Annexure P2 passed by Assistant Provident Fund Commissioner, Gwalior.

2. The petitioner is a Company, registered under the provisions of the Companies Act, 1956. Its establishment is governed under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, hereinafter referred to as the ‘1952 Act’ and also under the provisions of the Employees Provident Fund Scheme, 1952, hereinafter referred to as the ‘1952 Scheme’. The petitioner Company has been allotted a Provident Fund Code No. MP/IN/9826. The petitioner has three categories of Employees, i.e. Firstly, Workman Category, which includes Unskilled, Semi-skilled, Skilled and Highly skilled, secondly, Staff Category which includes Supervisor and Officer and thirdly, Management category, which includes Senior Officer, Manager, General Manager and Vice President.

3. The petitioner company in accordance with the management policy has been paying Variable Dearness Allowance (for brevity, ‘VDA’) which is payable to first category of employees i.e. Workmen-category and they are getting package of salary, which includes Basic + VDA + HRA + Transport allowance + Canteen allowance + Lunch incentive. The petitioner company has been remitting the provident fund contribution of eligible employees in accordance with the 1952 Act and the 1952 Scheme and it has been deducting provident fund contribution on two components of salary i.e. Basic + VDA. However, it has not been deducting provident fund contribution on other components i.e. Transport Allowance + Attendance incentive + Special allowance + Lunch Incentive.

4. The Assistant Provident Fund Commissioner noticed that the petitioner Company was paying wages to its workers in guise of allowances to avoid the EPF liability, hence it issued a summon on 9.2.2007 under Section 7A of the 1952 Act for determination of provident fund dues against the petitioner company for the period from June 2003 to December 2006.

5. The petitioner company contended before the Assistant Provident Fund Commissioner that it was not liable to pay provident fund contribution of its workers on other heads of wages except basic wage + VDA. The Authority vide order dated 12.4.2008 has held that the Special allowance is being paid to the workers as a part of monthly salary and in order to reduce the provident fund liability the management has separated this amount from the basic wages. The Authority has further held that the petitioner company is not liable to pay provident fund contribution arid deduct provident fund of the workers on washing allowance because it has been given to workers for maintaining the uniform clean.

6. In regard to other allowances, the Authority has held .that other allowances are part of basic wages for the purpose of provident fund contribution. Hence, the Authority has held that the petitioner is liable to deposit provident fund contribution for the period from June 2003 to March 2006 of Rs.69,09,534.

7. Against the aforesaid order the petitioner company filed an appeal before the Employees provident Fund Appellate Tribunal New Delhi under Section 7A of the 1952 Act. The appellate authority dismissed the appeal.

8. Learned Counsel for the petitioner Company has contended that the impugned orders passed by the Assistant Provident Fund Commissioner and the Appellate Authority are against the provisions of the 1952 Act. The petitioner company is not liable to deduct provident fund from the wages of the workers except basic wages + VDA and it has been depositing the provident fund contribution with the department accordingly. Hence, it is not liable to deposit any additional amount. In support of his contentions learned Counsel relied on the judgment of the Hon’ble Supreme Court in the case of Manipal Academy of Higher Ed