The Employees’ Provident Fund Organization, Ministry of Labour and Employment (“EPFO”), through a circular dated 14^th February, 2020, has issued guidelines to bring in uniformity in the proceedings of inquiries by Assessing Officers (“AOs”) under the Employees’ Provident Funds and Miscellaneous Provident Act, 1952 (“The Act”) (Section 7A* of The Act), in relation to resolution of disputes or determination of the amount due from the employer.

The following guidelines have been issued by the EPFO keeping in mind that different AOs were using different methods of inquiries:

1. Inquiries under the relevant provision of Section 7A of The Act shall not be initiated for any purpose other than the scope of the Section. This means that such inquiries can only be initiated for disputes relating to applicability and determination of dues. Such inquiries cannot be initiated under the following grounds (list is not exhaustive)-

1. i)Non-submission of returns;
2. ii)Non-production of records;

iii)           Non-cooperation in inspections.

1. AOs will have to record reasons in file on the basis of evidence available on record, regarding existence of a prima-facie case of default by the employer or of an applicability dispute, before initiating such an inquiry.

1. Any complaint will be required to be investigated by the Enforcement Officer under The Act, and substantiated on the basis of admissible evidence gathered during investigation. Inquiries on the basis of mere complaints has to be avoided.

1. Before initiation of inquiry, the AO has to record in writing, the proximate nexus with the evidence available on record about the default and the period for which the inquiry is intended to be held.

1. Once the inquiry is initiated based on a specific reason, it cannot extend beyond the scope of that reason recorded. For any new reason or period, separate notice has to be issued. Further, the records summoned from the employer must have reasonable linkage with the subject-matter and the period.

1. Reasons for initiation of inquiry has to be recorded in writing and a copy of all the documents which has formed the basis for initiation of the inquiry must be supplied to the concerned parties along with the notice (under Section 7A of The Act).

1. The notice initiating inquiry will have to be assigned a computer generated diary number from the Compliance e-proceedings portal and any such notice without this diary number will be invalid.

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* 7A. Determination of moneys due from employers. –

1. 
   The Central Provident Fund commissioner, any Additional Central Provident Fund Commissioner, any deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order-

In a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and

Determine the amount due from any employer under any provision of this Act, the Scheme or the Pension Scheme  or the Insurance Scheme, as the case may be,

And for any of the aforesaid purposes may conduct such inquiry as he may deem necessary.

2. The officer conducting the inquiry under sub-section (1) shall, for the purposes of such inquiry have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the following matters, namely:-

(a) Enforcing the attendance of any person or examining him on oath;

(b) Requiring the discovery and production of documents;

(c) Receiving evidence on affidavit;

(d) Issuing commissions for the examination of witnesses, And any such inquiry shall be deemed to be a judicial proceeding within the meaning of section 193 and 228, and for the purpose of section 196 of the Indian Penal Code (45 of 1860).

3. No order shall be made under sub-section (1), unless the employer concerned is given a reasonable opportunity of representing his case.

3A. Where the employer, employee or any other person required to attend the inquiry under sub- section (1) fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employers, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record.

4. Where an order under sub-section (1) is passed against an employer ex-parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry ;

Provided that no such order shall be set aside merely on the ground that there has been an irregularity in the service of the show cause notice if the officer is satisfied that the employer had notice of the date of hearing and had sufficient time to appear before the officer.

Explanation. – Where an appeal has been preferred under this Act against an order passed ex-parte and such appeal has been disposed of otherwise than on the ground that the appellant has withdrawn the appeal, no application shall lie under this sub-section for setting aside the ex-parte order.

5.  No order passed under this section shall be aside on any application under sub-section (4) unless notice thereof has been served on the opposite party.

Source: Employees’ Provident Fund Organization, Ministry of Labour and Employment

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