Judgment:
ORDER
Huluvadi G. Ramesh, J.
1. In this petition, the petitioner has sought for setting aside the order dated 5-7-2007 at Annexure-K passed by the Employees Provident Fund Appellate Tribunal, New Delhi and also to set aside the order of the first respondent dated 3-9-2001 at Annexure-G and for such other reliefs.
2. The prayer to declare paragraph 32A of the Employees Provident Fund Scheme, 1952 as ultravires the provision of Section 5 and Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 is given up by the learned Counsel for the petitioner in view of the amendment brought to the EPF Employees Pension (II Amendment Scheme) 2008.
3. As it transpires, the petitioner commenced manufacturing and exporting business on 10-6-1996. Thereafter, alleging non disclosure and non-payment of the EPF contribution towards coverage for the employees, the first respondent sent a letter dated 3-9-2001 through RPAD as per Annexure-G asking them to pay damages of Rs. 79,739/- in respect of Account No. 1, Rs. 11,452/- in respect of Account No. 2, Rs. 1,21,339/- in respect of Account No. 10, Rs. 7,295/- in respect of Account No. 21 and Rs. 146/- in respect of Account No. 22 under the head 'PENAL DAMAGES' for the period from 1997-98 to 1999-2000. Stating that the petitioner is not liable to make payment of contribution since they were entitled to infancy protection as provided under Section 16(1)(d) of the Employees Provident Fund and Miscellaneous Provisions Act, prior to the amendment, the petitioner filed an appeal before the Appellate Tribunal. The Appellate Tribunal by its order at Annexure-K, has opined that the appellant cannot escape its liability to pay damages solely on the ground that the Code number was allotted retrospectively. Hence, this petition, challenging the order to pay damages as well as the order of the Appellate Tribunal confirming the order of the Commissioner to make contribution.
4. Heard the learned Counsel for the respective parties.
5. It is the submission of the learned Counsel for the petitioner that the Code number was allotted on 29-6-1999 and ordered to pay EPF contribution with retrospective effect. It is the contention of the petitioner that unless and until the code number is allotted, the petitioner is not suppose to make payment and he was waiting for allotment of code number. It is also submitted that the order directing him to pay the contribution retrospectively i.e. from 10-6-1976 is not in accordance with law. Accordingly, sought for quashing the impugned order at Annexures-G and K.
6. Per contra, the learned Counsel appearing for the Respondent-Authority submitted that the petitioner is not a law abiding citizen and he did not voluntarily coma forward to subscribe and to make provisional payment towards EPF contribution rather the Inspector of the Department inspected the industry of the petitioner and assessed the contribution to be made towards EPF, as such the petitioner was directed to pay contribution as well a8 the penalty for the lapse on its part. He further submitted that there is no error as such committed in making assessment much less the order passed by the Appellate Tribunal in upholding the order of the Commissioner to pay damages for the relevant period.
7. In the light of the arguments advanced, the point that would arise for consideration is as to whether the orders at Annexures-G and K require interference.
8. As it stands, as per the petitioner, he has commenced his manufacturing and export activity on 10-6-1996. Of course, somewhere during 1999 it appears the Inspector of the Respondent-Authority shown to have visited the industry and on cross checking found that the petitioner has not paid subscription to the EPF. In those circumstances, on such report being made, the Commissioner proceeded to impose penalty as well as directed him to make payment. It also appears that code number was allotted on 2 9-6-1999 on the presumption that at the time of allotting the code number, Section 16(1)(d) of the EPF Act was removed from the statute and therefore, the petitioner was directed to make payment with retrospective effect and fine was imposed for the default.
9. As per the submission of the learned Counsel for the petitioner Section 16(1)(d) was very much available on the statute at the relevant point of time when he had commenced the Industry i.e. on 10-6-1996 and he is entitled to the benefit of exemption as is envisaged under Section 16(1)(d) of the Act, thereafter he is responsible for making payment. The order to mate payment with retrospective effect at the time of allotment of the code number is contrary to the statutory benefit extended in the statute at the relevant point of time.
10. The main grievance of the respondent-Authority is that knowing fully well, the petitioner did not subscribe EPP rather only on inspection it was found that he did not make payment and subscribe towards EPF in the usual course. Necessarily when the code was allotted there was nothing on the statute book exempting the petitioner from coverage of EPF, hence the Authority has necessarily imposed penalty on it and also directed the petitioner to make contribution on such allotment of code number with retrospective effect.
11. What is being noted is that whether there is violation or otherwise, the industry was commenced on 10-6-1996 and at that relevant point of time, Section 16(1)(d) of the Act was in existence and it was in force till 22-9-1997 and there need, not be contribution for the said period since there was an exemption at the infancy stage. Although by an amendment, the exemption clause was removed by an Act 10/1998 it was only w.e.f. 22-9-1997, what is to be noted is that the moment the industry was commenced during 1996, at that time, exemption was very much available in the statute book and only it came to be removed w.e.f. 22-9-1997. It is further noted that since it has come Into effect w.e.f. 22-9-1997 the exemption granted is omitted.
12. In the circumstances, though the petitioner need not pay the fine levied, but the fact remains that he has to subscribe EPF w.e.f. 22-9-1997 and to pay the contribution from thereon. So fair as payment of contribution from 26-9-1999 onwards is concerned, if the amount is not paid subsequent to 1999 that has to be paid. But having regard to the fact that exemption which was available under Section 16(1)(d) was removed from the statute subsequently during 1997 with retrospective effect i.e. from 22-9-1997, the penalty imposed has to be quashed, directing the petitioner to pay subscription towards EPF w.e.f. 22-9-1997. It is for the respondent-Authorities to calculate the amount from 22-9-1997 onwards and to intimate the petitioner to pay the same within one month from the date of intimation. The petitioner shall pay all the arrears after the notice being issued by the respondent-Authorities within one month from the date of intimation and the amount be remitted to EPP contribution. Accordingly the petition is allowed in part.