I am working in a company and have now noticed that the company is collecting the PF amounts but is not depositing these at the EPF Office.
1. What are the liabilities for the company ?
2. Who is liable to be punished ? Management or HR ??
3. What i should do now ???
1. The liabilities are explained in the EPF Act 1952 and the same are given below.
2. Management and HR is also responsible for violations All those involved during the period of non remitting the PF contributions are liable to be prosecuted.
3. You should inform management to make payments forthwith. Else you should also report to EPFO as well as quit the company i fthey are not listening to your sane advise.
PROVISIONS OF EPF ACT 1952
Penalties.
(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act, the Scheme, the Pension Scheme or the Insurance Scheme or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to one year, or with fine of five thousand rupees, or with both.
(1A) An employer who contravenes, or makes default in complying with, the provisions of section 6 or clause a of sub-section 3 of section 17 in so far as it relates to the payment of inspection charges, or paragraph 38 of the Scheme in so far as it relates to the payment of administrative charges, shall be punishable with imprisonment for a term which may extend to three years but –
(a) which shall not be less than one year and a fine of ten thousand rupees in case of default in payment of the employees’ contribution which has been deducted by the employer from the employees’ wages;
(b) which shall not be less than six months and a fine of five thousand rupees, in any other case:
Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term.
(1B) An employer who contravenes, or makes default in complying with, the provisions of section 6C, or clause a of sub-section 3A of section 17 in so far as it relates to the payment of inspection charges, shall be punishable with imprisonment for a term which may extend to one year but which shall not be less than six months and shall also be liable to fine which may extend to five thousand rupees:
Provided that the Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term.
(2) Subject to the provisions of this Act, the Scheme, the Pension Scheme or the Insurance Scheme may provide that any person who contravenes, or makes default in complying with, any of the provisions thereof shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to four thousand rupees, or with both.
(2A) Whoever contravenes or makes default in complying with any provision of this Act or of any condition subject to which exemption was granted under section 17 shall, if no other penalty is elsewhere provided by or under this Act for such contravention or non-compliance, be punishable with imprisonment which may extend to six months, but which shall not be less than one month, and shall also be liable to fine which may extend to five thousand rupees.
14A. Offences by companies
(1) If the person committing an offence under this Act, the Scheme or the Pension Scheme or the Insurance Scheme is a company, every person who at the time the offence was committed was incharge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section 1 where an offence under this Act, the Scheme or the Pension Scheme or the Insurance Scheme has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any Director or Manager, Secretary or other officer of the company, such Director, Manager, Secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
A related case is given below for ready references of what happens
Central Bureau of Investigation (CBI) searched eight premises of prominent Mumbai builders and developers Hiranandani Brothers for under-reporting employee numbers and evading employee provident fund (EPF) payments.
A CBI official said the bureau suspects the Hiranandani brothers of conniving with four officials from the EPF Commissioner's office in Thane, and diverting the employer's contribution to the EPF to other sources.
The amount of evasion was not known since search and seizure operations had not been completed.
Despite repeated attempts, Hiranandanis were not available for comment on the development.
A late evening release from CBI did not mention Hirannadanis but said CBI conducted searches at seven premises in Mumbai after registering a regular case against four officials of the Regional Provident Fund Commissionerate, Mumbai and directors of a private group of companies having interest in real estate, hotel and resorts. During the searches, several incriminating documents were seized which are under scrutiny, the release said.
According to the FIR, during the year 2003-05, the officials of Regional Provident Fund Commissionerate, Mumbai and two directors of a private group of companies entered into a criminal conspiracy with each other for the purpose of cheating and prepared bogus bills of provident fund contribution of five companies of the group while such contributions were not paid. The companies were thereby allowed to get undue unofficial benefit of Rs 168 crore and corresponding loss to the government exchequer.
The release said it is alleged that the officers of the Regional Provident Fund Commissionerate had inspected the five firms of the group and found that for financial year 2004-05, the five firms had not paid provident fund contribution to the tune of Rs 8.47 crore. Subsequently, only a small amount of Rs 2.20 lakh was deposited towards PF liabilities. Further, during the financial year 2003-04 also one of the group of companies had to pay PF liabilities running into Rs 160 crore, but that was not paid.
Source : Business Standard 8th april 2008
