CGIT2 Delhi EPF matter order dated 16.12.2025 in EPF Appeal No. D-2/07/2020 H K Corporation vs RPFC Faridabad on 16 December 2025

(1) Where an employer makes default in the payment of any contribution to the fund, or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government by notification in the Official Gazette, in this behalf, may recover from the employer by way of penalty, damages at the rates given below: —

<table> <thead> <tr> <th>S.No.</th> <th>Period of Default</th> <th>Rate of Damages<br/>(% per annum on<br/>arrears)</th> </tr> </thead> <tbody> <tr> <td>(a)</td> <td>Less than two months</td> <td>5%</td> </tr> </tbody> </table>

<table> <thead> <tr> <th>S.No.</th> <th>Period of Default</th> <th>Rate of Damages<br/>(% per annum on<br/>arrears)</th> </tr> </thead> <tbody> <tr> <td>(b)</td> <td>Two months and above<br/>but less than four months</td> <td>10%</td> </tr> <tr> <td>(c)</td> <td>Four months and above<br/>but less than six months</td> <td>15%</td> </tr> <tr> <td>(d)</td> <td>Six months and above</td> <td>25%</td> </tr> </tbody> </table>

*(2) The damages shall be calculated to the nearest rupee, 50 paise or more to be counted as the nearest higher rupee and fraction of a rupee less than 50 paise to be ignored.*

From the above said sections, it is made clear that damages may be levied by the respondent for belated remittance of PF dues of employees working under the supervision and control of the employer. Further, interest is also leviable, as the respondent is required to credit the same to the accounts of the subscribers. The rate of levy of damages is prescribed under Para 32A of the Employees' Provident Funds Scheme, 1952, Para 8A of the Employees' Deposit Linked Insurance Scheme, 1976 and Para 5 of the Employees' Pension Scheme, 1995, which empowers the CPFC or any authorized officer to recover the dues from an employer by way of penalty, damages at the rate given above.

It is also important to mention here that at the time of admission of the appeal, the appellant was directed to deposit 20% of the assessed damages as a condition for grant of stay on the impugned orders till disposal of the appeal. However, the said amount was not deposited, and consequently, the stay was vacated vide order dated 14.09.2021. Admittedly, the amount has neither been deposited, nor recovered by the respondent till date.

Whole of the arguments of the appellant is centred around the fact that as per show-cause notice, the delay in remittance was for four years, and that the respondent failed to issue monthly reminders, which is in violation of chapter 5 of the departmental guidelines (5.1.2). Another leg of arguments of the appellant is that word 'may' is used in section 14B of the Act, and the authority failed to give reasons for imposing damages at the maximum rate. Further, it is submitted that financial difficulties of the appellant, being a manpower supply agency, and receiving delayed payments from its principal employer, were not duly considered.

On the other hand, the respondent defended the impugned orders and stated that the appellant had been afforded opportunity and their representations were duly considered, though it didn't have any relevant material.

So far so the first leg of argument of the appellant that the respondent authority had violated the accounting manual and had not informed about delay in remittance of provident fund, that is not tenable. Now the computer has shown each and everything to the appellant about the delayed remittance of provident fund. If for the sake of arguments, it is taken as true than also, it is only a technical defect which cannot upturn the whole order.

The second leg of argument of the Ld. Counsel for the appellant is based upon the fact that the authority had not used its discretion but imposed the maximum rate of damages prescribed without considering his defence. However, that argument is also not tenable in view of the fact that this Tribunal had also given a number of opportunities to counsel for the appellant to furnish the audited balance sheets. However, no audited balance-sheet was furnished. Further, the appellant failed to provide any details regarding the dates on which payments were received from its customers, where the man-power used to be supplied or dates of Provident Fund remittances. Therefore, the respondent rightly not considered the plea of financial difficulty as mitigating circumstance. So far as the interest component under section 7-Q of the Act is concerned, the same has never been challenged by the appellant, nor stayed earlier by this Tribunal.

Considering the above facts and circumstances on record, I find no merit in the appeal. Hence, the same stands dismissed. The orders passed by the respondent authority under section 14B and 7Q of the Act are hereby confirmed. The appellant is directed to deposit the assessed dues in terms of the impugned orders within three weeks from the date of receipt of this order. A copy of this order be sent to both the parties. Consign the record to the record room.

(Atul Kumar Garg) Presiding Officer