Incentive payments and production bonuses linked to performance do not qualify as basic wages for provident fund contributions. Assessment orders must be reasoned, transparent, and disclose specific computational data to satisfy the requirements of natural justice and legal validity.

JUDGMENT :

SHAMPA DUTT (PAUL), J.

1. The writ application has been preferred challenging an order dated 03.08.2007 passed under Section 7A of the EPF Act and the order dated 03.05.2011 passed under Section 7B of the EPF Act and also the prohibitory order dated 14.06.2011 passed by the respondent P.F. authorities.

2. The petitioner’s case in short is that the petitioner company is engaged in the manufacturing activities of electrical equipments and for that purpose had employed employees at its factory and office. That apart, the petitioner company had got jobs executed through contractors who carried out the work by engaging their own men. The petitioner company at no material time had any supervision control or administration over the manner and nature of work of the contractors' employees.

3. It is further stated by the petitioner that the establishment of the petitioner company was covered under the said Act and was initially allotted a P.F. Code Number on the basis of a voluntary declaration made by the petitioner company to the effect that the said Act became applicable to the establishment of the petitioner company on and from 07/05 with employment of 20 or more employees in the establishment. Since then the establishment had been paying regular contribution under the said Act in respect of the covered employees. The respondents vide their letter dated 15.09.2006 preponed the coverage from 7/2006 to 1/1997. An inspection was done by the Enforcement Officer of the respondent authorities, but no copy of the inspection report, or any report dated 17.08.2006 had been given/served to the petitioner.

4. The petitioner then received a summon dated 01.05.2007, in connection with a proceeding under Section 7A of the said Act, whereby dues under the said Act were purported to be determined for the period from 01/97 to 06/06.

5. It is stated that although it was mentioned in the said summons initiating the 7A proceeding that the Authorized Officer had reason to believe about failure of remittance of dues by the establishment on consideration of certain information laid before him, yet no copy of such alleged information or material which formed the basis of such consideration was furnished to your petitioner. The said summons also was not accompanied by a copy of the report dated 17.08.2006 as purportedly prepared by the Enforcement Officer.

6. On receipt of the summons, your petitioner company was duly represented on 08.05.2007 before the Authorized Officer in the first hearing. A notice dated 14.05.2007 under section 32 of the Code of Civil Procedure was issued in an utter malafide manner for appearance of the directors of the company on 28.05.2008. On May 24, 2007, a prayer for adjournment was made with a request to fix the date of hearing after 15th July, 2007 since the directors were outside the country. On 15.06.2007 the respondent authorities issued another notice, a copy whereof notice was given fixing the date of hearing on 20th July, 2007.

7. It is the case of the petitioner that an order under Section 7A of the EPF Act was passed by the respondent authority, without giving a proper hearing to the petitioner herein in spite of the petitioner having duly made a represent