2018 (8) TMI 133 - KERALA HIGH COURT

Failure to pay the employees' contribution under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees State Insurance Act, 1948 before the due date provided under the said enactments - Held that:- The learned Judges had elaborately considered the decision in Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] and has found the provisions having application in different fields. Section 43B(b) dealt with the employer's contribution and sub-clause (va) of Section 36(1) was concerned with the employees contribution as rightly held. We do not find ourselves persuaded to take a different view with respect to employee's contribution and we respectfully follow the decision of the Division Bench of this Court in Merchem Ltd.[2015 (9) TMI 560 - KERALA HIGH COURT]. We, hence, answer the substantial question of law raised with respect to reconsideration of Merchem Ltd. in the negative, against the assessee and in favour of the Revenue.

Whether the 'amounts payable', the reference obviously is to “any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other funds for the welfare of employees” as found in sub-clause (b) of Section 43B, which refers only to the employer's contribution and not the employee's contribution? - Held that:- On remittance of this contribution, within the due date, it is allowed as a deduction under Section 36. If it is not paid to the welfare fund within the due date provided under the relevant statute, it remains as an income in the books of accounts of the assessee/employer Company. The said contribution having not been paid to the applicable welfare fund within the due date provided, the assessee for all time is deprived of claiming such a remittance, made subsequently, as deduction from the income.

This, as the Hon'ble Supreme Court noticed, is looking at the spirit behind the labour welfare legislation and the need for the employer to satisfy the remittance within the time provided under the statute creating the welfare fund. At least with respect to the employee's contributions, which the employer deducts from the salary of the employees, if it is not remitted into the fund within the due date, the employer not only has defaulted the stipulation in the labour legislation but has received an income; albeit an illegal enrichment. Sub-section (v) is with respect to and confined to a gratuity fund and does not have any relevance here. We, hence, answer the other questions of law framed, also against the assessee and in favour of the Revenue.