TMI Blog2023 (7) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised banks, portal etc. Para 38 of the scheme is to be read in consonance with the Para 30 and 32 of the Scheme along with relevant provisions of the EPF Act, 1952. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial piece of legislation for providing social security to the employees and their families and casts an obligation upon the employer to make compulsory deduction for provident fund and to deposit in the workers account in the EPF office. The initial responsibility for making payment of the contribution of the employer as well as of the employee, lies on the employer, however, the employer is authorised before paying the member employee his wages in respect of any period or part of period for which contributions are payable, to deduct the employee's contribution from his wages. The issue is squarely covered against the assessee by the decisions of CHECKMATE SERVICES P. LTD. [ 2022 (10) TMI 617 - SUPREME COURT] and many High Courts of the country. There is no merit in the appeal of the assessee, the same is accordingly, hereby dismissed. - I.T.A No. 642/Kol/2022 - - - Dated:- 27-6-2023 - Shri Sanjay Garg, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed u/s 36(1)(va) of the Act. 4. It has been held time and again that law declared by a court will have retrospective effect, if not otherwise stated to be so specifically. It is also well settled proposition that whenever, a previous decision is overruled by a larger bench of the Supreme Court, the previous decision is completely wiped out and Article 141 will have no application to the decision which has already been overruled and the court would have to decide the cases according to the law laid down by the latest decision of the Hon ble Supreme Court and not by the decision which has been expressly overruled. The above reasoning stems from the principle that when a court decides a matter, it is not as if it is making any new law but it is as if it is only restating what the law has always been. The reliance in this respect can be placed on the decision of the Hon ble Supreme Court in the case of RamdasBhikaji and Choudhary vs. Sadananda (1980) 1 SCC 550 and on the recent decision of the Hon ble Supreme Court in the case of Manoj Parihar and Ors. Vs. State of Jammu Kashmir and Ors SLP(C) No.11039 of 2022 vide order dated 27.06.2022; PV Goerge vs. State of Kerala (200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that if the facts of the case are appreciated in the light of the aforesaid proposition, there will not be found any delay in depositing the amount into the employees contribution to the PF made by the assessee. Apart from raising the above oral contentions, the ld. Counsel has also filed the following written submissions: The contentions of the assessee is that when the collection /receipt of the deduction out of salary/wages can be treated as income, whether on the date of deduction or on the date when salary/wages due for the particular month. *As per section 2 24(x) of the IT Act 1961 (Act) 38 of the Provident Fund scheme 1952 (PF Scheme) it is the date when the amount is received (collected) from the employee that the same is treated as income of the assessee. Therefore, unless the amount is received by the assessee the same cannot be treated as income. As per section 5 of the Act also the amount can be treated as income when received because in case of such deduction there is no question of accrual of income. When the amount is received from employee, the same is treated as income for the purpose of sec 2(24(x) of the Act. The provisions of section 2(24(x) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d administrative charge: Provided that the Central Provident Fund Commissioner may for reasons to be recorded in writing, allow any employer or class of employer to deposit the contributions by any other mode other than internet banking. (2) The employer shall forward to the Commissioner, within twenty-five days of the close of the month, a monthly abstract in such form as the Commissioner may specify showing the aggregate amount of recoveries made from the wages of all the members and the aggregate amount contributed by the employer in respect of all such members for the month: Provided that an employer shall send a Nil return, if no such recoveries have been made from the employees : Provided further that in the case of any such employee who has become a member of the pension fund under the Employees' Pension Scheme, 1995, the aforesaid form shall also contain such particulars as are necessary to comply with the requirements of that Scheme. (3) The employer shall send to the Commissioner within one month of the close of the period of currency, a consolidated annual Contribution Statement in Form 6A, showing the total amount of recoveries made during the period of cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect form No. 12A,(page 269) column 2 of which speak wages on which contributions are recovered and column three says amount of contributions due as per recoveries made in the wages/acquittance register being statement of contributions made to be submitted as per sec 38(2). Therefore, what is crucial is the date on which recovery made. Kindly also see form no. 6A (at page 251, the 5lh column) which also says Amount of workers contributions deducted from wages Attention is also invited to form 3A wherein it has been recognized that the actual payment of salary/wages for a particular month is in the next month. It is stated that March paid in April and so on and last February paid in March. This also shows that it is the actual date of payment from which due date is to be counted. In the course of hearing, a query was raised by the Bench as to what happens to PF if the salary is not at all paid, whether there is liability of payment of PF or not. The answer is straight. Section 2(24(x) as well as sec 36(1)(va) will not apply since there is no receipt by the employer by way of deduction, hence there will be no income u/s 2(24(x) and as a corollary to that section 36(l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make payments in respect of the employer's as well as employees contribution in respect of wages for such period within a period of 15 days from the close of the month to which the wages relates. On the other hand, in our view, most appropriate interpretation would be that the employer would be at liberty to make payment of the contribution concerned within 15 days (subject however to the further grace period) from the end of the month during which the disbursement of the salary is actually made and the contribution of the, provident fund are, thus, generated, inasmuch as, the provision relating to the disallowance of such contribution on account of delay is rather an artificial provision. In our view, a liberal approach has got to be made to this issue. Ultimately, therefore, we reverse the order of the lower authorities and direct the assessing officer to examine whether the payments of contribution in the present case were made within 15 days (allowed with further grace period of 5 days) from the close of the respective months during which the disbursement of the salary/wages were actually made. The assessing officer should recompute the amount disallowable, if any, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taken. Useful reference can be made to the decision of Supreme Court in the case of Vegetable Products 88 ITR 192 which is often relied on for the said proposition by the Tribunals and Courts. The provisions of section 30, and 38 were also referred to in the case of Checkmate Services P Ltd. 448 ITR 518 but only for the purpose of showing the liability of the employer but the issue with regard to the definition of month or due date of payment of the PF was not the issue. However, it has been held by the Hon ble Court that because of deeming provision u/s 2(24(x) the amount when received from employee will be the income and it will be allowed as deduction u/s 36(1) (va) only when such deduction from employee is paid within the due dates. Hence the legal issue with regard to the payment of PF may be decided in favour of the assessee. It is however submitted that with regard to the payment of the ESI, section 31 of ESI Regulations Act 1950 read with section 39 of the ESI Act is clear that the payment of ESI is to be made within 21 days from the end of the month for which it is due. Hence if any payment is not made within 21 days of the end of month, the same shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts as mentioned under sub section 2(b)(i) to 2(b)(iii). 9.1 Now, Section 6 of the said Act provides for Contributions and matters which may be provided for in the Scheme: Section 6: Contributions and matters which may be provided for in Schemes. 1[***] The contribution which shall be paid by the employer to the Fund shall be [ten per cent] of the basic wages, [dearness allowance and retaining allowance (if any)] for the time being payable to each of the employees [(whether employed by him directly or by or through a contractor)], and the employees contribution shall be equal to the contribution payable by the employer in respect of him and may, [if any employee so desires, be an amount exceeding ten per cent. of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section. Provided that . 9.2 It is imperative here to reproduce certain paras of the Employees Provident Fund Scheme, 1952 (In short, the Scheme ). 30. Payment of Contribution (1) : The employer shall, in the first instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per para 38 of the Employees' Provident Funds Scheme prescribes mode of payment, the employer is required to remit both the employees' as well as the employer's share of contributions together with administrative charges thereon before the close of the 15th of every month electronically through internet banking of the authorised banks, portal etc. Para 38 of the scheme is to be read in consonance with the Para 30 and 32 of the Scheme along with relevant provisions of the EPF Act, 1952. 11. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial piece of legislation for providing social security to the employees and their families and casts an obligation upon the employer to make compulsory deduction for provident fund and to deposit in the workers account in the EPF office. The hon ble Apex Court in the case of Maharashtra State Coop. Bank Ltd. Vs. Provident Fund Commissioner (2009) 10 SCC 123 has held, Since the Act is a social welfare legislation intended to protect the interest of a weaker section of the society i.e. the workers employed in factories and other establishments, it is imperative for the courts to give a purposive inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Scheme, shall be punishable with imprisonment which may extend to six months or with fine of Rs. 1,000/-. .. In its working, the authorities were faced with certain administrative difficulties. An employer could delay payment of Provident Fund dues without any additional financial liability. Parliament, accordingly, inserted s. 14B for recovery of damages on the amount of arrears. The reason for enacting s. 14B is that employers may be deterred and thwarted from making defaults in carrying out statutory obligations to make payments to the Provident Fund. The object and purpose of the section is to authorise the Regional Provident Fund Commissioner to impose exemplary or punitive damages and thereby to prevent employers from making defaults. 12.1 Thus, the hon ble Supreme court, in clear terms has held that the initial responsibility for making payment of the contribution of the employer as well as of the employee, lies on the employer, however, the employer is authorised before paying the member employee his wages in respect of any period or part of period for which contributions are payable, to deduct the employee's contribution from his wages. 12.2 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sings Ltd. (2003) 129 Taxman709 (Mad.), before the Hon ble Madras High Court, following issues were raised by the revenue: 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was certain amount of ambiguity over the expression '15 days from the close of the month' as defined in section 38 of the Employees' Provident Fund Scheme, 1952, vis-a-vis month in which salary becomes due to the employees and the salary is paid to the employee ? 2. Whether the Tribunal was right in law in reckoning the date of payment of salary (vii) 7th of the succeeding month as the date from which the due date of payment to the Government of ESI and EPF dues and the delay thereon is to be considered ? 13.1 The Hon ble Madras High Court has deliberated upon the various provisions of the E.P.F. Act, 1952 and E.P.F. Scheme, 1952, has made the following observations: 4. In our considered opinion, we are of the view that the Tribunal is not correct in coming to the conclusion that there was some ambiguity in construing the expression month used in para 38 of the Scheme under the Provident Fund Act on the premise t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir salary i.e., Salary payable. Our view has been fortified by the Division Bench of this court in Presidency Kid Leather (P) Ltd. v. Regional Provident Fund CIT (1997) 91 F.J.R. 661, wherein the Division Bench of this court held as follows : As per para 38 of the Employees' Provident Funds Scheme, the employer is required to remit both the employees' as well as the employer's share of contributions together with administrative charges thereon before the close of the 15th of every month. Para 30 of the Scheme imposes an obligation on the employer to remit both the shares of contributions in the first instance and para 32 of the Scheme enables the employer to recover the employees contributions from the wages of the employees. The initial responsibility for making payment of the contributions lies on the employer irrespective of the fact whether the wages are paid in time or not. As such, the Provident Fund payments made after the due date will attract the penal damages under section 14B of the Act. The Tribunal committed serious error in coming to the contrary conclusion. Hence the first two questions of law referred to us are answered in the negative agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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