Reasonable Opportunity Must Be Given To Employer For Determination Of Escaped Amount U/S 7C Of Employees Provident Funds Act: Telangana High Court

Brief facts of the case

The Writ Petition was filed by the employer aggrieved by the orders passed under Section 7C of the Act, 1952 by the Assistant Provident Fund Commissioner, Hyderabad, who determined an amount of Rs. 15,21,834/- as contribution in respect of an international worker namely Mrs. Leigh Fisher.

The counsel for the petitioner submitted that the petitioner namely M/s Aga Khan Academy was not-for-profit charitable institution which was set up as a Centre for Excellence, providing financial assistance to more than 50% of the students. Dr. Geoffrey Fisher was the Head of the Academy handling day to day affairs of the academy at the relevant period. During his tenure he engaged his wife namely Mrs. Leigh Fisher who was a citizen of Australia as Consultant for the period from 28.02.2015 to 31.10.2015 and as an employee for 3 years from 01.11.2015.

The Assistant PF Commissioner initiated 7-A enquiry for the period from April, 2013 to June, 2015 and passed an order on 12.03.2018 determining the contributions payable as Rs.52,72,451/- in respect of domestic and international workers. Accordingly, the petitioner has paid the entire contributions as ordered by the Department. The 7-A order became final.

Thereafter, Mrs. Leigh lodged another complaint that PF contributions were not paid from 01.02.2015 to 01.11.2019. Basing on the said complaint, a show-cause notice was issued to the petitioner. The proceedings under Section 7A of the EPF Act commenced. But surprisingly, the Assistant PF Commissioner passed order under Section 7-C of EPF Act. There was never an impression given that the proceedings were under Section 7C of the Act. Section 7C of the EPF Act provided for determination of escaped amount which escaped determination of the dues by employer under Section 7A.

The impugned order did not disclose framing of any issue with regard to the escapement of any amount. The first issue was with regard to whether Mrs. Leigh Fisher was eligible for enrollment into Provident Fund under the EPF and MP Act 1952 being an international worker? The second was with regard to what was the period for which the employer was liable to pay EPF dues in respect of the complainant, Mrs. Leigh Fisher? The third issue was with regard to what were the wages/salary/remuneration on which the complainant was eligible for EPF calculation? and the fourth issue was with regard to what was the quantum of EPF dues payable by the establishment, if due?

The impugned order did not detail what was the omission or failure on the part of the employer for determining correct amount due under Section 7C.

Finding of the Court

Justice G. Radha Rani observed that it is well settled that statutory remedies were applicable to the orders passed intra vires the statute only but not applicable to the orders passed ultra vires the statute.

"Section 7C mandates that the employer shall be given reasonable opportunity of representing his case before redetermining the amount due from him. The word used is "shall". But, as seen from the record, no opportunity was provided to the petitioner for representing his case before issuing proceedings under Section 7C of the Act. He was not given an opportunity to submit his objection with regard to initiation of proceedings under Section 7C of the Act."

The writ petition was thus allowed.

Case Title: M/s. The AGA Khan Academy v. Assistant PF Commissioner

Citation:2022 LiveLaw (Tel) 58

Click Here To Read/Download Order