By consent of the parties, heard finally.
2. The petitioner, running a health care & gymnasium centre, has challenged the impugned order passed by the Presiding Officer of Employees Provident Fund Appellate Tribunal, confirming the order passed by the Provident Fund Authority under section 7-A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short "the Act"), whereby it has been directed to deposit the dues.
3. Admittedly, a show cause notice dated 16.03.2006 was issued by an Enforcement Officer, S.R.O of Assistant Provident Fund Commissioner under the Act. It is also specifically mentioned that:-
"(iii) Yours is an establishment classified as Expert Service to which the Employees Provident Funds and Miscellaneous Provisions Act, 1952 has been made applicable by the Government of India by a Notification issued under section 1(3)(b) of the Act."
4. The petitioner, therefore, by reply dated 24.04.2006 denied the basic demand, as well as, the fact that their establishment had 23 employees on 27.02.2006. That was the date when respondents' Officer visited and found those persons in the premises.
5. By order dated 23.06.2010 it was held as under:
"On going through the records such as memorandum and articles of association of M/s.Fitness Point Health Care Pvt Ltd company is registered under company Act 1956 it is seen that the various of objects of the company to be perused on its corporation are to be provide all kind of facilities "training, consultancy etc related to health care, gymnasium, medical, nutrition, diet and fitness of human beings". It is therefore felt that the provisions of section 1(3)(b) can be made applicable to the establishment under schedule of "Society, Club Association which provides any other service to their member or to any of their guest on payment" being notified in Government Gazette from 31.05.1962."
6. This was also on a foundation that there were more than 20 employees working in the establishment. The petitioner preferred an appeal before the Tribunal and by the impugned order dated 15.10.2010, the appeal was dismissed. The liability, therefore, has been confirmed accordingly.
7. The establishment which falls within the ambit of section 1(3)(a) of the Act and where the employees are more than 20, the whole burden shifts upon such employer to show that they are not covered by the Act. But in a case like this, where the Department is unable to justify the basic action and fail to demonstrate on record that the petitioner has more than 20 employees on the date when the inspection was taken; and they fall within the ambit of particular entry, the Authority, in no way, in my view, is permitted to say that the burden still lies upon the petitioner to prove otherwise. In the present case, when show cause notice was issued, it was specifically stated that there were 23 employees working and the establishment falls within the classification "Expert Service". The petitioner has denied by reply with detailed statement with supportive documents. But while passing the order on 23.06.2010, it was observed that the petitioner is providing facilities of training related to health care, gymnasium and fitness of human beings; and that the provisions of section 1(3)(b) of the Act are applicable to the establishment, that is, "Society, Club Association which provides any other service to their member or to any of their guest on payment".
8. Therefore, it is clear that when the show cause notice was issued, based upon the so called Inspector's Report, they thought that the activities of the petitioner were of "Expert Service". But later on after receiving the reply and the defence raised by the petitioner, they treated it as "a health club" as it falls within the entry so recorded. Therefore, first of all, in my view, it is always necessary for the Department to give show cause notice with clear details so that the petitioner or the person like the petitioner get opportunity to reply to defend their case. After reply and thereafter without even correcting the show cause notice when Department want to catch them on the ground/foundation on some other entry, then, in my view, definitely it created complication and/or in a given case deprive them of their rights to defend the case and/or give proper reply to the basic show cause notice. Admittedly, situation as recorded here is similar in the present case. The initial show cause notice was never changed. Based upon unchanged show cause notice, the order was passed based upon the changed entry.
9. Importantly, the show cause notice was on the basis of the Inspector's Report which is reflected in the order. The petitioner apart from giving reply and denial to the case of the Department that there were 20 employees, submitted their documents as well as record to show that they never employed more than 10 employees in the establishment. The Department could not prove otherwise. The Department never insisted and/or asked the petitioner to produce any other document. It is not the case of the Department that the petitioner has fabricated or even manipulated the record. Therefore, the petitioner's case in such circumstances ought to have been accepted. Mere presence of more than 20 persons in the health club cannot be the foundation to say that on that day there were 23 employees present in the premises. The presence of 20 or more persons including the employees is not sufficient requirement. The requirement is that there must be more than 20 employees employed in the particular establishment.
10. The observation based upon the Hon'ble Supreme Court's Judgment in the case of V.K.Bhatt, Inspector, EPF Vs. Allwin Concrete Blocks & Tiles Mfg.Co reported in AIR 1974 SC 337, in my view, is wrongly taken as a foundation in the present facts and circumstances, to say by using the term "where 20 or more persons are employed". The Manager though signed the list that there were more than 20 persons present on 27.02.2006, that itself cannot be stated to be admission of the petitioner's management to say that all those were the employees of the petitioner on the day in question. Therefore, the so called inquiry report/Inspector's Report, just cannot be the foundation to deny the contentions raised by the petitioner and/or to accept the case of the Department as done in the present case.
11. The Tribunal has also accepted the case by over looking this basic foundation of the case as recorded above. To say that the burden lies upon the appellant or the person like petitioner to prove its staff's strength as the same was within his knowledge, in the present facts and circumstances and in a situation where the Inspector without any justification and/or supportive material just observe that more than 20 persons were present in the health club, that itself cannot be the reason to accept the case of the Department that there were 20 employees working on that day in the establishment. In my view, the case should be that the particular establishment has more than 20 employees and "not the persons present in the establishment". It also should be specified the item and/or entry within which they fall.
12. Another fact is that once the petitioner placed on record the averments that there were only 12 employees working at the relevant time, unless, proved otherwise and/or brought on record, some more substantive documents and/or material, the case of Department that there were more than 20 employees working on the said date, just cannot be accepted. The concerned Officer and/or Court while deciding the issue, though averments were specifically made, and if other party fails to prove contrary, the same needs to be accepted as the material available on record. In the present case, the documents so placed on record show that there were only 12 employees and definitely not 20 employees as stated, working with the establishment. I am declined to accept the case of the Department that the burde
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n still lies upon the Management to prove otherwise because the staff strength is well within their knowledge. It is unacceptable. 13. Both the Authorities in the present case have wrongly relied upon the report of the Enforcement Officer by over looking the document placed on record by the petitioner. 14. Therefore, taking over all view of the matter, the burden in the present case was wrongly shifted and as already observed the opportunity should be given to the petitioner to prove its case by giving clear notice in accordance with law. 15. Therefore, both the orders dated 23.06.2010 and 15.10.2010, are quashed and set aside. However, the respondent-Department is free to issue fresh show cause notice with details and take action in accordance with law by giving opportunity to the petitioner. 16. The petition is accordingly allowed. No order as to costs.