For determining “due date” for payment of Provident Fund contributions, clause (1) of Paragraph 38 of Employees’ Provident Fund Scheme, 1952 is relevant. It reads as follows:-
“The employer shall, before paying the member his wages in respect of any period or part of period for which contribution are payable, deduct the employee’s contribution from his wages which together with his own contribution as well as an administrative charge of such percentage [of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee and in respect of which provident fund contributions are payable, as the Central Government may fix], he shall within fifteen days of the close of every month pay the same to the Fund by separate Bank drafts or cheques on account of contributions and administrative charge.” It has been held in:-
(a) Fluid Air (India) Ltd. Vs. D.C.I.T. (1997) 63 ITD 182 (Mumbai)
(b) Madras Radiators & Pressings Ltd. Vs. D.C.I.T. (1996) 59 ITD 515 (Mad.)/ (1996) 56 TTJ (Mad.) 662 that the term “month” has not been defined in the Scheme, there is ambiguity regarding interpretation of the words “fifteen days from the close of month” appearing in Paragraph 38 of Employees’ Provident Fund Scheme as to whether it should be reckoned from the month in which such contributions are received by the assessee from its employees or from the month in respect of which such contributions are received by the assessee, in cases where wages are paid in subsequent month(s), and this ambiguity should be resolved in favour of assessee, i.e. fifteen days are to be reckoned from close of the month in which employees contributions are recovered i.e. the month of payment of wages.
With due respect to above decisions, in my opinion, there is no such ambiguity. Proper analysis of Paragraph 38 of E.P.F. Scheme reveals as follows:-
(i) Employer’s liability to deduct employee’s contribution arises before paying wages to employees (and not as and when wages are earned by employees) in respect of any period or part of period. Thus the employees’ contribution comes in the hands of the employer during the wage disbursal month and not during the wage period (which may be a calender month or any other period and not necessarily a period equal to one month.)
(ii) Employees’ contribution thus deducted is to be deposited together with employer’s contribution within 15 days of the close of month. Thus, if both employees’ and employer’s contributions for Provident Fund is made within 15 days of the close of month in which wages are paid, it will be within due date. So, relevant month to be considered for determining due date is payment month i.e. wages disbursement month and not month or period to which wages relate.
Otherwise also, any other interpretation would produce absurd results in following cases:-
1. Where wage-period is not month. It may be weekly or daily and may cover portions of two months.
2. Where due to lock-out or strike or due to natural calamities or financial stringency, wages are paid after return of the situation to normalcy.
3. Increment in wages is effected with retrospective effect.
The view that payment month is relevant for considering due date for payment of Provident Fund contribution is also supported by Calcutta Tribunal ‘E’ Bench’s decision dated 28-5-2001 rendered in the case of Kanoi Paper & Industries Ltd,. Calcutta Vs. ACIT, Co. Circle 7(2), Calcutta [ITA No.1260(Cal) of 1996], an unreported decision till the date of this write-up, which held in para 6 of its order as follows:-
“Clause 38 of the Employees’ Provident Fund Scheme, 1952, fixes the time limit for making payment in respect of contribution to the provident fund to be 15 days from the close of the month concerned. However, the issue here is whether the “month” should be considered to be the month to which the wages relates or the month in which the actual disbursement of the wages is made. We are of the considered opinion that the expression “month” should mean here the month during which the wages/ salary is actually disbursed irrespective of the month to which the same relates. Thus, the scheme of the Govt. in this regard is that once a deduction is made in respect of the employees’ contribution to the provident fund from the salary/ wages of the employee or the employer also makes his contribution, factually at the time of disbursement of the salary the payment in respect of such contribution should be made forth with. If for some reason or other the payment of salary for a particular month be held up for considerable period of time it cannot be said that the employer would be liable 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.”
Since the due date has to be determined under the provisions of the Employees provident Fund & Misc. Provisions Act 1952, let us examine some other provisions of E.P.F. Scheme framed under the said Act.
While returns and forms are required to be filed with reference to the month (meaning calender month as per provisions of the General Clasues Act), or currency period (referring to period of financial year of Government i.e. period commencing in April and ending in March next), mention of wage period(s) is required specifically. Form No.12 is captioned as follows:-
“Statement of Contributions for the month of ………..19….
Wage Period from …………… to ………………..”
Form No.3A on annual contribution card requires tabulation of date for the currency period o calendar-monthly basis and the first month mentioned is “March paid in April”.
The last month mentioned is “February paid in March”.
The intention is apparent that wages paid between April to March and contributions deducted there from are to be reported in this form, although the wages may relate to any period from March to February next.
In Form No.12A (revised), monthly statement of contributions requires report on amount of contribution “recovered from the workers”. As per paragraph 38, recovery of contributions can be made only at the time of disbursal of wages. Thus the data required to be produced should relate to the payment-month irrespective of the wage period.
Also, five days of grace period has been allowed to employers for payment of Provident Fund contributions by clause (iii) of CPFC’S Circular No.E.128(1) 60-III dated 19-3-1964 as modified by circular No.E11/128 (section 14-B Amendment)/73 dated 24-10-1973.
CONCLUSION REGARDING ISSUE OF ‘DUE DATE':
Due date for payment of Provident Fund contributions is 15 days from the end of month in which wages are paid (plus grace period of 5 days). Thus, if wages pertaining to April’ 2012 is paid on, say, 7th May’ 2012, due date for payment of Provident Fund contribution is 20th June’ 2012 [i.e. 15th June' 2012 as increased by grace period of 5 days].