Relief to establishments covered under EPF and MP Act, 1952 from levy of penalty for delayed deposit of dues during lockdown
Due to prolonged lockdown announced by the Govt. to control the spread of COVID-19 and other disruptions due to pandemic, establishments covered under EPF & MP Act, 1952 are distressed and unable to function normally and pay the statutory contributions in time.
Considering the difficulty faced by the establishments in timely deposit of contributions or administrative charges due for any period during lockdown, the EPFO has decided that such delays due to operational or economic reasons shall not be treated as default and penal damages should not be levied for such delay.
Circular dated 15.05.2020 has been issued to Field Offices of EPFO containing instructions to the effect that no proceeding shall be initiated for levy of penal damages in such cases which is available under TAB “COVID-19” on home page of EPFO website.
The aforesaid step shall ease the compliance norms for 6.5 lakhs EPF covered establishments and save them from liability on account of penal damages.
EMPLOYEES’ PROVIDENT FUND ORGANISATION
(Ministry of Labour & Employment, Govt. of India)
Bhavishya Nidhi Bhawan, 14, Bhikaji Cama Place, New Delhi – 110 066.
All Addl. CPFCs in charge of Zones
All RPFCs in charge of Regional Offices
All OlCs in charge of District Offices
Sub: Relief to establishments and factories covered under EPF and MP Act, 1952 from levy of penal damages for delay in deposit of dues during Lockdown to prevent COVID-19.
In view of the prolong lockdown announced by the Government to control the spread of COVID-19 pandemic and other disruptions due to Pandemic situation, the establishments covered under EPF & MP Act, 1952 are distressed and not able to function normally.
The Hon’ble Apex Court of India in McLeod Russel India Limited Vs RPFC
(2014)15 SCC 263 has underlined the broad contours and essential elements of section 14B of the Act and held that mens rea, or culpable state of mind of the employer. is a sine-quanon for inviting damages under section 14B. In other words, the provisions of section 14B would get attracted only when there is a positive evidence of mens rea on the part of the employer while committing default in timely remittances. This legal position has later been reaffirmed in Assistant Provident Fund Commissioner vs. Management of RSL Textiles. (CA 96-97 of 2017)
Considering the difficulty faced by the establishments in timely deposit of contributions during the period of lockdown due to operational and economic reasons, it is evident that such delays are without mens rea of the employer. Thus. the delay in deposit of
contributions during the period of lockdown announced in terms of the Disasters Management Act, 2005 cannot be attributed to any culpable state of mind of the employer and will not, therefore, attract the provisions of section 14B of the EPF Act.
Therefore, for any delay in payment of any contributions or administrative charges due for any period during the lockdown, no proceeding should be initiated for levy of penal damages in such cases.
(This issues with the approval of the Central P F Commissioner)
Addl. CPFC (Hgrs.) Compliance & Legal
Copy to: FA & CAO, CVO, All Addl. CPFC (Hqrs) at HO, Director, PDNASS, Addl. CPFC (IS)