Category Archives: Amnesty

September 3, 2014 · 5:04 pm

On Amnesty Scheme 2014: Part – III

(This part of the article visualizes the scenario in the Regional Offices, consequent to the directions given in Para A- 2 (iv), (v) and (vi) of the Hqrs. letter dated 03.03.2014 on the Amnesty Scheme-2014. Para 2 (iv) deals with the settlement of cases pertaining to omitted wages on which contribution had been determined by the ESIC authorities.)

An employer approaches the Branch Officer of the Insurance Branch in a Regional Office in the chamber of the latter. The Branch Officer offers the employer a seat and asks him what the matter is.

Employer: My factory remains covered under the ESI Act for a very long time. But, during the last inspection, the Inspector reported that I had not paid contribution on certain items of wages. I had certain doubts. But, you had also issued orders under Sec. 45-A upholding the version of the Inspector and disagreeing with my statements of defence against such assessment, during personal hearings.

Branch Officer: Okay, what did you do then?

Employer: I went to the E.I. Court against your orders. But, he Court had also upheld your orders. I appealed against it. The matter is now pending in the High Court. I am informed that the ESI Corporation is providing a solution, now, through certain Amnesty Scheme. I would like to know whether I could get relief through it.

Brach Officer: Yes, you are welcome. Your case falls within Para A. 2 (iv) of the Hqrs. instructions dated 03.03.2014.

Employer: I have already paid contribution as per the entries in the Reg. 32 Register. This assessment in question has been made on omitted wages which I had not taken into account for calculation of contribution. You have assessed that contribution as Rs. 4,00,000/-. As the E.I. Court has also upheld your order, if I am to pay the contribution now, I must pay Rs. 4 lakhs and interest for the entire period including the period of litigation. In the normal course, the period of litigation is exempted only for calculating the quantum of Damages. How much should I pay now under the Amnesty Scheme?

B.O: You have to pay contribution which “shall not be less than 30% of the assessed amount of contribution”. Secondly, you have to pay the interst in full, of course, only with reference to that 30%. Thirdly, you will not be levied any Damages at all.

Employer: What? Did I hear right? Did you say that I had to pay not less than 30% of the assessed amount? Is it true that the choice is left to me to decide the quantum of contribution payable?

B.O: Yes, the instructions literally mean so.

Employer: Sir, I am very lucky then. I shall pay that amount today itself and get my case settled.

B.O: No, you have to get the permission of the High Court to settle the matter out of court. You have to opt for a solution under the Amnesty Scheme only thereafter.

Employer: Okay, I shall take steps immediately. But, still, I do have certain doubts.

B.O: What are they?

Employer: Will you ask me to produce records maintained under Income Tax Act?

B.O: No, all the relevant records had already been verified, even before I issued orders under Sec. 45-A. There is no question of verifying the records once again.

Employer: But, I am told that you are calling for records.

B.O: No. That is only in respect of cases in which contribution had been determined on Assumed Wages. But, in your case, contribution had been determined on the basis of your records and after hearing you. In fact, your records have been verified twice, once by the SSO and again by me. Besides, the E.I. Court has already given its stamp of approval of the legitimacy and legality of the assessment thus made. There is nothing for us to verify your records once again.

Employer: Oh, Thankyou very much! I shall make use of this Scheme without fail. …. Sir, may I ask you one more thing?

B.O: Yes. You can.

Employer: When will there be the next Amnesty Scheme?

B.O:Why?

Employer: Because, I am not paying contribution on many items of omitted wages, at present, too. I shall keep the issue pending that way, in spite of inspection by the SSO, in spite of your hearings and 45-A orders and in spite of verdicts in your favour by the E.I. Court and even the High Court, so that, at a later date, when you bring out another Scheme for Amnesty, I could pay only 30% of it with Interest and without Damages and finish off the matter. This provision emboldens us to evade the payment of contribution in time on all items of wages under Sec. 2 (22) and escape even normal liability.

The Branch Officer remains silent.

Employer: Oh, what an easy way out! The Amnesty Scheme of 2006 was rightly and only for Sec. 85 cases. But, the Amnesty Scheme of 2008 brought into picture the Sec. 75 cases but said that the entire amount of contribution had to be paid, as per the 45-A orders. Interest had also to be paid in full. There was only some relief in Damages. That way, that circular was also providing relief essentially under Sec. 85 only.

But, your Amnesty Scheme 2010 was a landmark. It introduced the concept of payment of 30% of the assessed dues. And, no penalty in the form of Damages. What a joy! This Scheme opened to the defaulters, the Door of Escape, very wide and the present scheme is also doing the same. This would make the benefit provisions also unattractive to the workforce, as the quantum of cash benefits depends only on the small amount of contribution we pay. There would, therefore, be no malingering and false certification too.

I only pray that every department of the Government of India emulates ESIC and rewards the erring assesses by recovering only 30% of the dues legally payable by the employers who turn out to be defaulters by not paying the dues in time. See you later, Thankyou!

The employer departs. The Branch Officer continues to remain in a pensive mood.

 

 

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August 25, 2014 · 7:55 pm

On Amnesty Scheme 2014: Part II

It was early morning on a Sunday. Mr. Peter, Mr. Rahim and Mr.Siva who are close friends are sitting on a bench under a tree in a park taking rest after their usual morning walk. They are working as ESIC Consultants. They have built up the reputation of being very sincere, honest and law-abiding in providing service to the employer and thereby to the working population and the ESI Corporation. They are very intelligent and knowledgeable. They never do resort to bribing the officers to get things done. Whenever they come across some problems, they discuss the issues with the officers of the ESIC and set right their records and ensure that their employers comply with the provisions of law.

Rahim, who is garrulous by nature, remains silent today and is looking at the sky for a long time. Amused by his silence, the other two ask him what the problem is. Rahim says, “One employer called me. He was a Managing Partner in a Firm, which he got converted into a Private Limited Company. He said that he had filed a case in the EI Court challenging an order issued under Sec. 45 of the ESI Act. The case remains pending and he asked me whether I could help settle the issue through the Amnesty Scheme”.

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August 22, 2014 · 6:47 am

On Amnesty Scheme 2014: Part-I

We find another Amnesty Scheme introduced by the ESIC, as per the Hqrs. communication dated 03.03.2014. The Scheme is in force at present, up to 27.01.2015.

Origin – only for criminal cases

A look at the history of the Amnesty Scheme shows that it was introduced first in the 1990s, to grant amnesty to those employers who had actually committed offences under the ESI Act and were facing prosecution Sec. 85 of the Act. Prosecution was only for the offence committed and was not for recovery of dues, for which there were other provisions. Prosecution of employers was resorted to, in addition to and in spite of the ESIC having recovered all the arrears. ESI Corporation had a provable case against those employers and the evidence was categorical and clear. The employers wanted a reprieve so that they could turn a new leaf. And that was where the Amnesty Scheme provided a relief.

The power to sanction prosecution was vested in the Regional Directors but they had no power to withdraw the cases once filed. The employers took up such cases only with the Hqrs. Threre had, occasionally, been cases where the Hqrs. communicated permission to withdraw the criminal cases filed by the Regional Directors.

It was in those circumstances, the concept of Amnesty came as a relief to the employers, as the Regional Directors had been given powers to withdraw the criminal cases filed against the employers. Corporation granted Amnesty to them, in spite of the fact that the Corporation had produced clear documentary evidence in the Court of Law, in all those cases to prove the offence committed by the employers. Corporation was in a legally stronger position that when it condescended to withdraw those cases, it could call that process as Amnesty. The important aspect of that Amnesty Scheme was that there was no loss of revenue to the ESIC in such cases.

Overstepping

But, the employers saw in the year 2010, a New Amnesty Scheme, which went beyond Sec.85 and extended its scope to Sec. 75 also. That came really as a surprising and shocking news to everyone, at that time itself.

Because, there could be no Amnesty for cases covered under Sec. 75. Employers resort to Sec. 75, when they feel aggrieved by the orders issued by the ESI authorities under Sec.45 determining the contribution due (let alone other issues covered under Sec. 75). The employers appeal to the EI Court under Sec. 75, disputing the coverage or the quantum of contribution determined as due. It becomes the duty of the Corporation, then, to explain its case in such cases, before the EI Court and justify its order with evidence and convincing reasons. The concept of Amnesty does not apply here, at all. It is a misnomer.

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