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2022 Supreme(Online)(KER) 8271
HIGH COURT OF KERALA
AMIT RAWAL, J
G4S FACILITY SERVICES (INDIA) PRIVATE LIMITED – Appellant
Versus
THE PRESIDING OFFICER, CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL CUM LABOUR COURT, KERALA STATE HOUSING BOARD BUILDING – Respondent
WP(C) NO. 4879 OF 2022
For the Appellants/Petitioners: B.ASHOK SHENOY, P.S.GIREESH, ARJUN R NAIK
For the Respondents: NITA.N.S., SC
Fund contributions must be based on universally applicable salary structures, not selective allowances.
Headnote:(A) Employees Provident Fund and Miscellaneous Provisions Act, 1952 - Sections 2(b) and 6 - The petitioner, a service provider, was accused of evading Provident Fund contributions by splitting salary allowances. The court examined if a few employees receiving certain allowances constituted systematic evasion across the establishment. The court ruled that allowances not universally applied do not attract contributions under the Act. (Paras 6-12)
(B) Judicial Review - The court reiterated that it cannot reappraise evidence but must uphold factual findings made by authorities based on presented evidence. (Paras 11-12)
Facts of the case:
The petitioner faced allegations of evading Provident Fund contributions by categorizing part of employee salaries as allowances, leading to imposed penalties. The notice was based on reports from the Enforcement Officer.
Findings of Court:
Findings emphasized differentiating allowances based on the employment structure and directly determined that not all employees received allowances consistently, thus supporting the petitioner’s stance.
Issues: Whether the allowances constituted basic wages under the Provident Fund Act, with implications for contribution requirements.
Ratio Decidendi: The critical findings highlighted that the test for inclusion in basic wages includes universal applicability, not simply based on partial application to select employees. Evidence did not substantiate systemic abuse across all employees.
Result: Writ petition allowed.
| Table of Content |
|---|
| 1. introduction of the petitioner and legal context. (Para 1) |
| 2. petitioner's defense against alleged evasion of pf contributions. (Para 2) |
| 3. opposing arguments on the liability and evidence. (Para 3 , 4) |
| 4. court's analysis and application of statutory definitions. (Para 5 , 6 , 8 , 9 , 10 , 11) |
| 5. final decision and reasoning for allowing the writ petition. (Para 7) |
JUDGMENT
Petitioner is a private limited company engaged in the business of providing ‘Facility and House-keeping Services’ to the various establishments in different places throughout India and is governed by the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘1952 Act’, for short) having assigned registration number KR/TVM/22096. The contribution of all the employees was on time being deposited in the account to avoid the wrath of the penal provisions of the Act, but was astounded to receive a notice dated 13.04.2016 from the office of Assistant Provident Fund Commissioner – respondent No.2 proposing to undertake an enquiry for determination of the amount payable by the petitioners for the period March, 2011 to July, 2015, primarily on the ground that an attempt to evade the payment of Provident Fund dues in respect of the employees towards the other allowances had been made. Aforementioned notice was issued on the basis of the reports dated 07.10.2013 and 14.08.2015 of the Enforcement Officer whereby it was found that petitioner company was indulging into splitting up of salary i.e., of the few employees as emanated from the pay slips where certain employees were given the allowances like site inspection, conveyance allowance and ERNI component of wages, thus it was a camouflage to evade the payment of contributions of the said employees. Petitioner submitted a detailed reply to the show cause notices but the competent authority vide impugned order dated 29.12.2016 Ext.P6 imposed the liability of Rs.7,00,000/-(Rupees seven lakhs only) on the allowances alone. An appeal Ext.P4 by raising detailed grounds was filed entailing into dismissal by the Tribunal vide order dated 06.04.2021 Ext.P7.
2. Mr.B.Ashok Shenoy, learned counsel appearing on behalf of the petitioner in support of the grounds taken in the writ petition made the following submissions:
(i) The order of the Provident Fund Commissioner particularly of a Tribunal, in fact prove and justify the plea of the petitioner company that it was not a universal act of the petitioner company in evading the payment of contribution towards the allowances in as much as that the Tribunal while examining the pay slips found that for a particular period the pay slips of few of the employees reveal the payment of the allowances referred above. In other words, the allowances were not paid to all the employees at par.
(ii) Contributions were deposited towards the basic wage and Variable Dearness Allowance (VDA). The definition of the basic wage, if read in conjunction with Section 6 of the Act, would reveal that the allowances like HRA and others would not fall within the definition of basic wage.
(iii) There was no willful or intentional evasion viz- a-viz non-contribution as alleged by the respondents.
(iv) The report of the Enforcement Officer was on a stereo-type printed proforma. It did not disclose as to how many employees were being paid the allowances resulting into imposition of penalty on account of non- payment of contribution.
3. In support of the aforementioned contentions, the judgment of Hon'ble Supreme Court in Regional Provident Fund Commissioner and anothers Vs. Vivekananda Vidyamandir and Others and various other appeals decided together, reported as[(2020) 17 SCC 643)] has been cited to contend that in case the company is able to prove the contribution of the allowances was not a camouflage but only to the few and in the absence of the same, the liability incurred upon the establishment was found to be justified. The aforementione
