Damages and interest on belated remittances
Recently, PF office has sent us the summon regarding the payment of Interest and damages for belated remittances. They have also levied damages and interest on the arrears calculated (for the duration 2005 to 2008) on special allowance after 7A inquiry in 2012 which was not a regular payment. The same was paid immediately in 2012 the moment we received the order. But now because of this the duration for calculating the damages has been considered for 7 years instead of few days.
Now the amount of damages has increased drastically. We would like to know if at all this damages and interest amount can be reduced. We would also like to know any recent judgement passed on the these kind of cases if any so that we can use that reference for further proceedings.
Looking forward for your guidance on the same.
Thanks & Regards,
Asked 3 years ago in Labour from Thane, Maharashtra
1. All the papers are required to be perused for advising properly,
2. After plain reading of the query, it appears that you shall have to pay the demanded damage and interest,
3. It is to be kept on mind that the interest amount is soring with the passage of time.
It would be difficult to provide appropriate advise without going through the documents .
Usually when it comes to non remittance of arrears the stance taken is stringent.
You need to take all records and the notice you have received to an advocate and he should be able to advise on perusal of the documents.
We had a 7A inquiry in the year 2012 in which PF officials had raised liability on special allowance which was the part of the CTC from 2005-2008. We came to know about the same after the inspection in 2012, where in we were told that special allowance would also be considered for PF calculation. Based on that we made the adhoc payment against the liability. Earlier we received the payment notice which was of X amount and when we visited PF office with all the necessary documents recently we were again asked to give employee wise details of that X amount to credit that amount in their respective account which should have been done earlier when we paid that X amount in 2012. Our point is that we have never defaulted in paying the regular payments. Now we have received the revised order stating the amount has increased from X to 3 times as they have considered the effect of that adhoc payment from 2005 which was not a regular payment.
We would like to know whether such kind of payments/ arrears (Liability on special allowance identified in 2012) would also attract damages & interest from 2005 OR 2012.
Through some sources we came to know that recently there was judgement passed on such case where in the damages were levied on such adhoc payments when identified and not from the beginning.
Please guide us on the same & help with some citations.
Asked 3 years ago
You have mentioned that you made an ad hoc payment towards the liability arising out of the 7A inquiry and the subsequent finding that the special allowance that formed part of CTC had to be taken into consideration while determining PF calculation/contribution of the employer.
The findings in 2012 would apply with retrospective effect and hence the liability would be binding in terms of damages and interest from the year 2005.
The best would be to engage a lawyer locally and negotiate with the PF office regarding waiver of penal interests any other exemptions that can be made in the current circumstances.
1. Your liability is from restrospective effect,
2. You shall have to make the said payment as demanded,
3. Make an apeal praying for waiver of interest.