SOCIAL SECURITY
READING MATERIAL
HANDBOOK FOR EOs/AAOs
The role of Enforcement Officer under the Compliance 2001 is more
important. Similarly the role of Assistant Accounts Officer under the
modernisation program is also equally important. The present training
programme focuses on the role of Enforcement Officer/Assistant Accounts
Officer for the better implementation of the provisions of Act and Schemes.
The topics included are key functional areas in Compliance and Recovery
and gives a fairly detailed description of the duties and responsibilities of officers
at the middle and senior level. The topics on “Compliance 2001”, “CCTS”,
Provisions relating to Levy of Damages and Exemption are of utmost
importance.
This booklet is not a substitute for the Act and Scheme or the Manuals but is
intended only as a reference guide to retrieve useful information in times of need
so that, field officers can discharge their functions and duties more effectively
and systematically. This handbook is a sincere attempt on the part of Zonal
Training Institute, EPFO, Chennai to compile all relevant issues and the latest
Instructions are appended at the end of the book. However, this handbook is not
a substitute to the statute or manuals.
2. The valuable guidance and suggestions received from many serving and
retired officers and officials of EPFO and their expertise in the field offices
made this book a valuable reference book. It is hoped that the users will be
benefited by this hand book for their efficient performance of the training.
HANDBOOK FOR EOs/AAOs
CONTENTS – PART II
S.No.
Topic
Page No.
1. Inspectors – Role, function and powers
1-9
2. Compliance 2001- Salient features
11-18
3. Role of APFCs Compliance
18-24
4. C.C.T.S – Object & Scope - Preparatory Action.
25-27
5. C.C.T.S – Salient Features – Compliance Default Codes
28-30
6. C.C.T.S – Input & output – Monitoring Report.
31-33
7. Assessment of dues under Section 7A – Section 7B and 7C
34-42
8. EPF Appellate Tribunal
43-50
9. Penal Provisions
51-65
10. Levy of Penal Damages
65-75
11. Application of Section 7Q
76-77
12. EPFO – Recovery Machinery
78-94
13. Penal Provisions to exempted establishments – Application.
94-96
14. Drill for conduct of Inspection of Un-exempted
Establishment
97-98
15. Drill for conduct of Inspection of Exempted Establishment
98-99
16. Terms and conditions of exemption under EPF Scheme
99-103
17. Holding of Securities in Demat Form
103-109
18. EPF System of Accounts
109-113
19. Revised Banking Arrangements
113-117
20. Pattern of Investment of funds
117-121
21. Settlement of PF Claims
122-128
22. EPS 1995 – Benefits – Dos and Don’ts in processing the
claims – Scrutiny of Form 10C and 10D
128-142
23. Pension Disbursement – Reconciliation – Disbursing
Agencies – Life Certificate
142-149
24. Settlement of EDLI Claims – Case Study
150-155
25. Procedure of crediting Interest
155-158
26. Nomination – Importance – Handling of death claims in the
absence of Nomination
158-162
27. Issue of PF Annual Statement of Accounts
162-168
28. Transfer of PF Dues on grant/cancellation of exemption
168-170
29. Transfer value of Pension Fund from Exempted to
Unexempted or Unexempted to Exempted Fund on
Grant/Cancellation of Exemption under EPS1995
171-173
APPENDIX I
1
INSPECTOR
Powers and functions of Enforcement Officer under Section 13 of the
Act – Action by EO with regard to Annexure ‘A’ & Annexure ’B’
Appointment of Inspectors:
There are two kinds of Inspectors, one appointed by notification under Section 13 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 merely to exercise certain powers mentioned in that section. The others are officers of the Employees’ Provident Fund Organisation or outside thereof who could be appointed as Inspectors for exercise of powers referred to above. The former is appointed under Employees’ Provident Funds (Staff and Conditions of Service) Regulations, 1962 and fall under the distinct cadre of Enforcement Officers. The Central Provident Fund Commissioner, Regional Provident Fund Commissioners, Assistant Provident Fund Commissioners and Enforcement Officers are notified as Inspectors under Section 13 of the Act. A notification regarding appointment of Provident Fund Officer and Enforcement Officer to be “Inspector” under Section 13(1) of the Act is issued.
Duties and responsibilities:
The chief duties and responsibilities of an Inspector are:
1. (a) to bring under the purview of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 every establishment which attracts the application of the Act by reason of requisite employment strength and its nature of activity;
(b) to recommend the coverage of establishment under section 1(4) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 on the joint request of the employer and the majority of the employees of the establishment provided the establishment is not liable to implement the Act;
(c) to bring under the ambit of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, establishment participating in Common Provident Fund in which one or more than one establishment is already covered under the Act;
2. To secure full compliance by the employer of that establishment with the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Schemes framed thereunder;
3. To attend to the problems of employers arising in the process of compliance and to the grievances of employees including rendering service through the Service Centre, if any set up, and where he cannot solve the problem or redress the grievances, to report the case to the Regional Provident Fund Commissioner for further action;
4. To conduct surveys when asked to, assess coverage potential to new categories of establishment;
5. To supply various prescribed forms to the employers on their request and educate them about their proper completion and punctual submission to the Regional/Sub-Regional Office;
6. to report to the Regional Provident Fund Commissioner, evasion, abuse, violation, defect or abnormality noted in the implementation of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Schemes framed thereunder;
7. To serve the warrant on the defaulting employer in recovery cases and attach and sell the property of the defaulting employer and to assist the Recovery Officer.
8. To attend to prosecution cases;
9. To conduct the prosecution cases as Assistant Public Prosecutors. All the Enforcement Officers are notified as Assistant Public Prosecutors.
10. To ensure that the establishment exempted under Section 17(1) / 17(1C) / 2(A) of the Act / the establishment, where its individual/class of employees exempted under paragraph 27 / 27A of Employees’ Provident Fund Scheme, 1952 or paragraph 28 of Employees’ Deposit Linked Insurance Scheme, 1976 as the case may be, is complying with the relevant provisions of the Act/Scheme and also the conditions governing the grant of exemption stipulated by the appropriate Government or Central Provident Fund Commissioner or Regional Provident Fund Commissioner, as the case may be. 11. To serve summons/warrants on the accused in respect of prosecution cases launched,
to enable quick results in larger interests of the Organisation; and
12. To obtain the requisite documents or particulars or verification of facts, etc., that are required by Regional Office/ Sub-Regional Office for rendering effective service by keeping liaison between the establishment and the office. He shall arrange to obtain and forward the final settlement claims and pension claims of retiring employees two months in advance of their retirement. The Regional Provident Fund Commissioner in-charge of the Region shall fix a target for each Enforcement Officer in the matter of applicability of the Act to the establishments and enrolment of members, for each year and the progress will be monitored on monthly basis through the respective Regional Provident Fund Commissioners. the Enforcement Officers should ensure compliance of the target fixed;
13. To verify and certify the past accumulations dues transferable by the establishment on account of application of the Scheme either due to coverage or on cancellation of exemption.
14. To carry out such other functions as may be assigned to him/her by the competent authority.
Powers of Inspectors (Enforcement Officers):
The Inspector has been given the following statutory powers (vide Section 13 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952), to enable him to discharge his duties effectively:
(a) To require any employer or any contractor from whom any amount is recoverable under section 8A of the Act to furnish such information, as he may consider necessary; (b) At any reasonable time and with such assistance as he may require to enter and search
any establishment or any premises connected with it and require any one found in-charge of it to produce for his examination any accounts books, registers and other
documents which have bearing on the employment of persons and payment of wages in the establishment;
(c) to examine with respect to any matter relevant to the aforesaid purpose the employer or any contractor from whom any amount is recoverable under Section 8A or his agent or servant or any other person found in-charge of the establishment or any premises connected therewith or whom the Inspector has reasonable cause to believe to be the employee of the establishment;
(d) to make copies of or take extracts from any book, register or other documents, maintained in relation to the establishment and, where he has reason to believe that any offence under this Act has been committed by the employer, seize with such assistance as he may think fit, such book, register or other document or portion thereof as he may consider relevant to that offence;
(e) to exercise such other powers as the Schemes may provide.
Search and Seizure – Scope and Powers of Inspector:
Section 13 of the Act empowers an Inspector for search and seizure to secure compliance from the establishment.
It is essential for every public servant to be well aware of his powers. This knowledge of powers helps him in discharging his duties more efficiently. Similarly, he can thereby avert the danger of exceeding limits of powers. Acting beyond the limits of powers can cause lot of problems including litigations. Similarly, if the public servant is not aware of his powers, he will not be able to achieve the results which he otherwise could have achieved by exercise of his powers. One of the powers of the Provident Fund Inspector defined under Section 13(1) of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is that of search and seizure. This power was not available to the Inspectors in the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the Act”) as it originally stood. However, the same was conferred on them by an amendment made by Act 28 of 1963).
The Inspector can at any reasonable time carry out search, if necessary. He can also seize the documents connected with an offence under the Act, which he has reason to believe to have been committed. For carrying out the search and seizure, the assistance as deemed fit by the Inspector can be obtained. If it is felt that the law and order problem is likely to be created, the assistance of local police can also be taken. The power of search of the premises is to be exercised sparingly and with discretion and as a last resort. Moreover, before carrying out the search it is desirable that the Regional Provident Fund Commissioner should be informed about the circumstances and his permission obtained to carry out the Search. If the employer refuses to produce the records before the Inspector, he should be persuaded to produce the same and even then if he fails to produce, the power of search and seizure as the case may be, may be exercised.
Section 13(2B) says that the provisions of Code of Criminal Procedure, 1973, shall, so far as may be, apply to any search or seizure under that Section as they apply to any search or seizure made under the authority of warrant issued under Section 94. From the reading of this Section, it appears that it is not necessary to obtain warrant before carrying out the search. But the procedure for search is laid down in Code of Criminal Procedure, 1973 has to be scrupulously followed. The relevant provisions of Code of Criminal Procedure, 1973 in this regard are those under Section 38 and Section 100. Section 100 of Code of Criminal Procedure, 1973 reads as follows:
“Persons in charge of closed place to allow Search:
(1) Whenever any place liable to search or inspection under this Chapter is closed, any person residing in, or being in charge of, such place, shall, on demand of the officer or other person executing the warrant, and on production of the warrant, allow him free ingress thereto, and afford all reasonable facilities for a search therein. (2) If ingress into such place cannot be so obtained, the officer or other person executing the warrant may proceed in the manner provided by sub-section(2) of Section 47.
(3) Where any person in or about such place is reasonably suspected of concealing about his person any article for which search should be made, such person may be searched and if such person is a woman, the search shall be made by another woman with strict regard to decency.
(4) Before making a search under this Chapter, the officer or other person about to make it shall call upon two or more independent and respectable inhabitants of the locality in which the place to be searched is situate or of any other locality if no such inhabitant of the said locality is available or is willing to be a witness to the search, to attend and witness the search and may issue an order in writing to them or any of them so to do.
(5) The search shall be made in their presence, and a list of all things seized in the course of such search and of the places in which they are respectively found shall be prepared by such officer or other person and signed by such witnesses; but no person witnessing a search under this Section shall be required to attend the court as a witness of the search unless specially summoned by it.
(6) The occupant of the place searched, or some person in his behalf, shall, in every instance be permitted to attend during the search, and a copy of the list prepared under this Section, signed by the said witnesses, shall be delivered to such occupant or person.
(7) When any person is searched under sub-section (3), a list of all things taken possession of shall be prepared and a copy thereof shall be delivered to such person. (8) Any person who, without reasonable cause, refuses or neglects to attend and witness a search under this Section, when called upon to do so by an order in writing delivered or tendered to him, shall be deemed to have committed an offence under Section 187 of the Indian Penal Code (45 of 1860).”
While carrying out the search it is absolutely essential that at least two independent witnesses are present. Sub-section (4) of Section 100 says that the officer carrying out the search shall call upon 2 or more responsible inhabitants of the locality in which place the establishment is situated or any other locality, if no such inhabitant is available or willing to give witness for search. The emphasis is on the neutrality and respectability of the witnesses. Such witnesses should be unprejudiced and independent and able to inspire the confidence of the Court if such a case is put up for trial. Trial, of course, applies mostly to cases investigated by police and Income Tax authorities, etc. It is desirable that these independent witnesses should be requisitioned from other Government department like ESIC, Office of Labour Commissioner, Factory Inspectorate, etc., wherever available. Such witnesses will be mostly unprejudiced, respectable and independent.
Before carrying out the search the Inspector should disclose his identity and that of the witnesses to the employer or occupant of the premises, as the case may be. He should then call upon the occupier to immediately produce the relevant documents or records. If he fails to do so the search of the premises can be carried out in order to trace the documents or records in question. It is essential that the occupant of the premises should remain present can be allowed to watch the search. After the search is over, a “panchanama” should be drawn on the spot incorporating therein the time of the commencement of the search, the time when it was over, the particulars of the documents, records found or seized, description of the place from where it was found or seized, and other details of the search. The seized documents, records or things should be suitably marked for identification. Generally, the signatures of the witnesses with date are obtained on the documents, records or things seized. The panchanama should be signed by the witnesses and the officer carrying out the search on the spot. A copy thereof should be delivered to the occupant of the premises and his signature obtained on the copy retained by the Inspector. Even if no documents are found, ‘nil’ panchanama should be drawn. If during the course of the search some other objectionable material like foreign currency, significant amount of unaccountable cash, unlicensed arms, etc., is found the appropriate authority should be informed immediately. If the employer or the occupier of the premises where search is to be carried out does not allow the Inspector and search party to enter the premises, resort can be taken to the provisions of Section 47(2) of Code of Criminal Procedure, 1973. Under this provision, if, even after disclosure of identity, authority, purpose and the demand of admittance duly made, the ingress cannot be obtained, it shell be lawful to break open any out or inner door or window of any house or place where search is to be taken. But, if such a place is in the actual occupancy of a female, who as per custom, is purdanshin, the officer carrying out the search shall, before entering such apartment, afford her every reasonable opportunity to withdraw and may then break open the apartment and enter it. Provision has also been made in Section 47(3) of Code of Criminal Procedure, 1973 to take care of the situation where the officer who has legally entered to carry out the search is detained or locked inside. In such an event he has the power to break open the door, window, etc., in order to liberate himself and the search party.
It is obvious that the situation described above, viz., seeking ingress by making open the doors or lock or seeking to come out when locked inside will very rarely arise. The Inspector should be tactful to avoid such situations. If such a situation is likely to arise the assistance of local police must be taken before proceeding for search.
As regards the seizure it is clear that this power is available only in respect of the books, register or other documents or portion thereof as are relevant in respect of any offence under the Act which the Inspector has reason to believe to have been committed by the establishment. It is necessary to prepare a seizure memo, on the spot, in respect of the seized documents. The seizure has also to be done before two independent and respectable witnesses. The seizure memo should contain the details of date, place and time of seizure, the signature, name of the persons from whom seized, the description of articles seized, the signature and name of the person from whom seized, the names of witnesses and their signatures, designation and full address and signature of the officer carrying out the seizure. The seized documents should also be marked for identification and signed by the witnesses with date. A copy of seizure memo should be delivered to the person from whom the documents were seized and his acknowledgement should be obtained for having received the copy.
It is observed that a feeling of helplessness is often expressed by the Enforcement Officers regarding reluctance or non-cooperation of the employers in the
matter of production of record. If the situation so warrants, the officers can take resort to their power of search and seizure in the manner stated above. This will have desired effect and the employers will also have the fear of authority of Inspectors.
To sum up:
Use the power of search and seizure sparingly and with discretion. Use it only when persuasion fails.
Apprise your Regional Provident Fund Commissioner about the circumstances and preferably obtain his permission to carry out search.
Take the assistance of local police before proceeding for search, if law and order problem is visualised.
Take two independent respectable and unprejudiced witnesses preferably two Government servants from departments like ESI Corporation, Office of Labour Commissioner, Factory Inspectorate, etc., as panchas.
Section 94 of Code of Criminal Procedure, 1973 (Old Section 98), inter alia, provides-
“that if a District Magistrate, Sub-Divisional Magistrate or Magistrate of the First Class (JMFC) has reason to believe that any place is used for depositing or selling stolen property or for depositing, selling or producing any objectionable article described in this Section, he may by warrant authorise any police officer above the rank of a constable to:
(a) enter such place with such assistance as may be required; (b) search the same in the manner specified in the warrant;
(c) to take possession of any property or article found there, which he reasonable suspects to be one for which search was carried out.
Section 99 of Code of Criminal Procedure, 1973 states that provisions of Section 38, 70, 72, 74, 77, 78 and 79 shall so far as may apply to all search warrants issued under Section 93, 94, 95 and 97.
Contents of Panchnama 1. Name and designation of the officer carrying out search 2. Name, designation and full address of witnesses. 3. Date and time of commencement of search. 4. Date and time of completion of search.
5. Description of what the panchas saw, viz., how the search was actually carried out, names of members of search party, what documents/records were seized from which place, that the articles seized where marked for identification, the employer or the occupier of the premises was present and watched the proceedings of search. If no seizure made then the description of documents found for examination and places from where found, etc.
7. Panchnama to be signed by the Inspector carrying out search and by the witnesses on the spot.
8. Copy thereof to be delivered to the employer or occupier of the premises and his signature obtained in token of having received the same.
Seizure Memo
(Under Section 13(2)(d)/13(2A) of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.)
1. Date of seizure :
2. Time of seizure :
3. By whom seized :
4. From whom seized :
5. Place from where seized :
Particulars of articles seized
Signature of the person from whom seized:
Signature of witness with full name, designation and address: (1)
(2)
Signature of the Inspector (Enforcement Officer):
Action by EO with regard to Annexure ‘A’ and Annexure ‘B’:
Preparation of Annexure ‘A’ is the prime responsibility of Compliance Section. This should be prepared carefully and where the visit of the Enforcement Officer to the establishment is absolutely necessary and the defaulting establishments should necessarily be included in the Annexure ‘A’. In addition, the requirement of accounts branch, if any, should also be included. The Annexure ‘A’ should be prepared preferably on weekly basis and provide the number of establishments atleast 7 establishments per day. This will take care of the actual and effective inspection that can be conducted by the Enforcement Officer. The establishments listed in the Annexure ‘A’ should be supported by an authority letter for each establishment under the signature of the Assistant Provident Fund Commissioner of the circle. No Enforcement Officer is expected to visit the establishment
without the authority letter. There is no regular inspection of establishments by the Enforcement Officer. The determination of dues under Section 7A also depends upon the receipt of Form 12-A from the establishments. Wherever the default in submission of Form 12A is detected through CCTS Reports, the Enforcement Officer should be directed to procure the same.
In order to facilitate the accord of sanction to prosecute any defaulter, the Enforcement Officer should furnish the Regional Provident Fund Commissioner a detailed report, touching on the following points:
(i) Name of the establishment.
(ii) Nature of the legal composition of the management, viz., Sole Proprietorship concern, Partnership firm, Limited Company, etc.
(iii) Name and designation of the employer (where the person committing offence is a company, name of the person who was in-charge and responsible to the company at the time when the offence was committed as well as of the company), if the fact indicates that the offence has been committed with the consent or convenience or is attributable to any neglect on the part of any Director or Manager, Secretary of the company name of such Director, Manager, Secretary and other Officer also be indicated. (iv) Address of the person(s) against whom prosecution is to be launched.
(v) Facts constituting the offence (Section of the Act/Paragraph of the Scheme). (vi) Evidence (witness as well as records) for supporting the case.
Once the prosecution is sanctioned the complaints should be filed in the Court within seven days along with the sanction of the Regional Provident Fund Commissioner. A proper record of hearings, adjournments and consultations, if any, with the Public Prosecutor or Private Lawyer should be maintained for each case, or a group of cases to be disposed of jointly. Mere making of notes of hearing, adjournment in the respective file is not enough. He should intimate the progress of the case(s) to Regional Provident Fund Commissioner after each hearing.
The employer’s action in violation of the provisions of the Act / Schemes should be carefully brought out before the Court. Where the employees’ contribution after having been deducted has not been paid, the fact that such Act constitutes Criminal Breach of Trust should be stressed before the Court to drive home the seriousness of the offence. Section 14AA provides for enhanced punishment for certain offences after previous conviction for similar offence. While filing the complaint, the fact of previous conviction, if any, for similar offence should be brought to the notice of the Court. He should also press for enhanced punishment under Section 14AA of the Act. He should request the Court for awarding a portion of the fine as compensation to the prosecution expenses as contemplated under Section 357 of the Code of Criminal Procedure, 1973.
Section 357 of Code of Criminal Procedure, 1908:
(1) When a Court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part, the Court may, when passing judgement, order the whole or any part of the fine recovered to be applied--
(b) in the payment to any person of compensation for any loss or injury caused by the offence, when compensation is, in the opinion of the Court, recoverable by such person in a Civil Court;
(c) when any person is convicted of any offence for having caused the death of another person or of having abetted the commission of such an offence, in paying compensation to the persons who are, under Fatal Accidents Act, 1855 (13 of 1856) entitled to recover damages from the person sentenced for the loss resulting to them from such death;
(d) when any person is convicted of any offence which includes theft, criminal misappropriation, criminal breach of trust, or cheating, or of having dishonestly received or retained, or of having voluntarily assisted in disposing of, stolen property knowing or having reason to believe the same to be stolen, in compensating any bona fide purchaser of such property for the loss of the same if such property is restored to the possession of the person entitled thereto.
(2) If the fine is imposed in a case which is subject to appeal, no such payment shall be made before the period allowed for presenting the appeal has elapsed, or, if an appeal be presented, before the decision of the appeal.
(3) When a Court imposes a sentence, of which fine does not form a part, the Court may, when passing judgement, order the accused person to pay, by way of compensation, such amount as may be specified in the order to the person who has suffered any loss or injury by reason of the act for which accused person has been so sentenced.
(4) An order under this section may also be made by an Appellate Court or by the High Court or Court of Session when exercising its powers of revision.
(5) At the time of awarding compensation in any subsequent civil suit relating to the same matter, the Court shall take into account any sum paid or recovered as compensation under this section.
As soon as the final orders are passed by the Court, he should immediately make a report to the Regional Provident Fund Commissioner giving a gist of the order. He should take steps to obtain a copy of the order at the earliest. (To leave the task of obtaining a copy to the Public Prosecutor or Private Lawyer, if one has been engaged, may result in getting the appeal, if any, time barred).
Under no circumstances, he should with hold the sanction and delay the filing of complaints except on written direction from the sanctioning authority, withdrawing the sanction accorded. The Enforcement Officer should not Act on oral directions in such cases.
The Courts should be prayed not to grant requests for adjournments so that the employees of the establishment are not put to hardships due to delay in the realisation of dues.
Wherever a portion of fine is awarded to the Organisation as compensation, prompt action should be taken to collect the same from the Court and to deposit in EPF Account No.02.
Wherever the employer did not comply with the orders of the Court in the remittance of dues within the stipulated period, the Court should be approached for invoking the provisions of Section 14C (2) of the Act for awarding enhanced punishment.
Any difficulty or abnormal delay in the trial or disposal of prosecution should be reported to the Regional Provident Fund Commissioner, for such action as may be deemed necessary.
The progress of prosecution cases should be watched through the special Register prescribed for this purpose.
The Enforcement Officer should fully acquaint himself with the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Schemes and the procedures.
Role of Enforcement Officer in Recovery Machinery:
Section 8 to 8G of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, deals with recovery of Provident Fund and other dues. The Enforcement Officer should fully acquaint himself with the provisions of the Act and procedure contained in the Chapter on Recovery Machinery.
He should assist the Recovery Officer in the recovery matter. For this purpose, he should obtain the latest bank account details of the establishments, details of debtors, business etc. and he should submit the same to the Assessing Officer/Recovery Officer. He should also obtain the latest Form 5A.
2
COMPLIANCE 2001 – INTRODUCTION – SALIENT
FEATURES
INTRODUCTION TO COMPLIANCE:
In terms of securing compliance with Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the Compliance Wing of the Organisation need to ensure -
(1) Timely coverage of all coverable establishments.
(2) Timely allotment of Code Number for a covered establishment. (3) Timely enrolment of all eligible employees to Provident Fund. (4) Timely deduction and remittance of dues to the funds.
(5) Timely detection of default for recovery and penal action. (6) Timely levy of damages.
(7) Timely grant of exemption.
(8) Timely inspection of establishments. (9) Timely action on legal matters.
(10) Infusing and sustaining hope, faith and conviction in the minds of subscriber-members.
Default Management - Recovery of dues:
To fulfil the mission of the Organisation and the objectives of the Act and Schemes, the default management and the recovery of dues are the key factors. To achieve this, the steps to be taken by the Enforcement are –
(a) Determine the dues under Section 7A of the Act.
(b) Realise Current Demand through the modes of recovery under Section 8F of the Act.
(c) Issue Recovery Certificates to the Recovery Officer to realise the dues by attaching the movable/immovable properties and arresting the employer and his detention in prison.
(d) In the case of default of employees’ share of Provident Fund contributions, first information reports are to be filed with the Police authorities in terms of Section 406/409 of Indian Penal Code.
(e) Ensure the frequent visits by Enforcement Officer to the defaulting establishments.
(f) Defaulters should be brought to the notice of the employees’ Union and the employers’ Organisation.
(g) Furnish the list of defaulters to the Banks so as to insist clearance certificate on Provident Fund and other dues before considering sanction of loans/advances to the establishments.
(h) Furnish the list of defaulters to the Income Tax authorities so as to enable them to examine the question of allowing relief, etc.
(i) In genuine and deserving cases instalment facility be allowed to defaulting employers to clear the dues.
(j) Recovery of interest under Section 7Q of the Act.
(k) Levy of damages on all belated payments in terms of Section 14B read with relevant provisions of the Scheme(s).
(l) Approach the Executive Magistrate to bind the accused employers for good conduct under Section 110 of Code of Criminal Procedure, 1973.
(m) Prosecution of defaulters, invoking Section 14 of the Act.
(n) Wherever the punishment awarded by lower Courts are meagre and inadequate, appeals to be made to secure enhanced punishments.
(o) Display the list of ten highest defaulters with the names of the establishments and the amount in default through a Notice Board, prominently placed at the entrance of the Regional/Sub-Regional Offices/Inspectorates.
Set-up:
The Head Office at Delhi is responsible for securing ‘COMPLIANCE’ under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 including -
(a) conduct of survey for the purpose of inclusion of more industries and class of establishments under the purview of the Act;
(b) to propose amendments to the provisions of the Act for effective enforcement. (c) to assist the Committee on exempted establishment.
(d) to process the applications seeking exemption from the operation of the Scheme(s).
(e) to monitor, review and assist the regions in the matter of recovery machinery, default management, legal cases and Appellate Tribunal and to issue suitable guidelines and procedural aspects in regard to the implementation of the Act. (f) to look into the grievances/complaints on Enforcement through squad of
inspectors.
The Headquarters Office shall obtain the requisite data on various enforcement matters for inclusion in the organisation’s Annual Report for its presentation to the Central Board of Trustees, Employees’ Provident Funds and placing it before the Parliament.
In the regions headed by Regional Provident Fund Commissioner, Grade I, he is assisted by Regional Provident Fund Commissioners, Grade II, with definite assignments namely, Enforcement, Recovery, Legal, Exemption, etc. The District Offices are located wherever the concentration of establishments are there and manned by Enforcement Officers for effective field functioning. The District Offices in certain selected areas is also designated as Service Centres to guide and assist the employers in complying with the provisions of the Act and Schemes and, in addition, render service to the subscribers in getting their benefits under the Schemes framed under the Act, expeditiously.
The Assistant Provident Fund Commissioner and Enforcement Officers are also vested with the powers of enforcement to assist the Regional Provident Fund Commissioner in their respective sphere so as to ensure proper enforcement of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
Every Regional Office / Sub-Regional Office should set up an exclusive section for each of the following functions:
(1)Compliance Section - i) Intelligence Section (Applicability of the Act)
ii) to handle unexempted establishments, including
securing Compliance from Establishments, monitoring of Enforcement Officers and inspection of establishments, default management, enforcing penal provisions, etc.
(2)Exemption Section -to process the exemption applications and monitor the performance of exempted funds.
(3)Damages Section -to initiate action to levy and realise Penal Damages and interest under Section 7Q, wherever due.
(4)Recovery Section -to initiate action to recover the arrear dues including arrear interest due under Section 7Q.
(5)Legal Section -to handle Court cases, Appellate Tribunal and Writ Petitions.
(6)‘Inspector’ -to perform the functions under Section 13 of the Act by the Enforcement Officers.
Note: Considering the need, the above nature of work may be
handled separately in each Section or combined in one or more Sections, set up to handle all the above matters. However, the procedure prescribed in respect of each nature of work should be strictly followed.
Flow Chart of Compliance Machinery: Authorities empowered to enforce the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952.
REGIONAL P.F.COMMISSIONER (Region)
Addl. CENTRAL P.F.COMMISSIONER (Compliance) CENTRAL P.F.COMMISSIONER (Chief Executive) Regional P.F.Commissioner (Sub-Regional Office) Regional P.F.Commissioner (Compliance & Recovery)
Regional P.F.Commissioner (Exemption)
Regional P.F.Commissioner (Legal)
Assistant P.F.Commissioner
(Compliance & Recovery) Inspectorates
Enforcement Officers
Service Centers Survey & Application of Act
Monitoring
Enforcement / Inspection
Default Management – 7Q
Penal Action
Recovery Proceedings
COMPLIANCE 2001 – AN INTRODUCTION
“Compliance 2001” programme was introduced in the year 2000-2001. The main objective of the programme is:-
what is claimed as establishments brought under the purview of the Act are in effect brought under Compliance fold:
what is claimed as members become contributing members and in their accounts contribution realised and interest thereon gets credited and individual annual statement of account issued in fulfilment of the statutory obligation
Strategy:
To achieve the above objective, the compliance (enforcement) wings of the field offices has been reoriented and restructured. All enforcement functions have been consolidated at the level of a Circle Officer (Assistant PF Commissioner) with appropriate complement of Enforcement Officers and support staff in each circle. Targets have been fixed for each Circle Officer in areas of detection of default, disposal of 7A cases, recovery and in enforcing compliance against the non-complying establishments. The purpose was to coordinate, focus and channelise the entire machinery and concentrate on delinquent employers so that members who are or claimed to be their employees are given the benefits under the Schemes as per their rights.
Work distribution system in the compliance function area was restructured, streamlined and the concept of area inspectors abolished. The primary objective being to focus on all non-complying establishments with proper accountability. Computer software was developed to cull out the progress achieved in converting an establishment from non-complying to a non-complying level and at the same time ensuring credit of money into the subscriber account.
The above issues are discussed at length in the following chapters
COMPLIANCE 2001 – SET UP OF COMPLIANCE WING- PLAN OF
ACTION AND IMPLEMENTATION
To fulfill the ‘Mission’ of EPFO and to achieve its objectives, an effective and sound compliance machinery is essential.
The compliance wing of an office covers the area of application of the Act to eligible establishments, entertaining voluntary coverage, securing compliance, grant of exemption, default management, enforcing penal provisions of the Act, levy of damages, monitoring performance of Enforcement Officers, Recovery, Tribunal and Legal matters and furnishing of authentic and accurate MIS data for ABP return.
The Compliance Section is required to attend the following items of work so as to enforce the provisions of the EPF & MP Act and the schemes framed there under:
1. Formation of circle and intelligence circle. Attaching officers to each circle. The circle is headed by the Assistant Commissioner, who will be assisted by the Enforcement Officers for the field performance. The Assistant P.F. Commissioner will have a cross functional responsibility with reference to accounts as well as enforcement matters.
2. The list of establishments falling in each circle should be maintained.
3. Maintenance of centralized register for covered establishment, on close of each month to arrive at the actual number of live establishments dealt in the office. The Code Number Register in the section should also be maintained up to date. The establishments which are brought under the purview of the Act are required to be closely monitored atleast for a period of 6 months to watch their compliance through CCTS reports. This is with a view to arrest the tendency on the part of newly covered establishments in committing default. The file relating to applicability kept in the Compliance Section should bear a fly leaf on the front inner cover to highlight the review made on the file by the Supervisors periodically.
4. Maintenance of ‘History sheet in respect of each establishment. A ‘History Sheet’ is an effective tool and serves for monitoring. It should necessarily be maintained for each establishment in a Register Form so as to record the basic details of the establishments with reference to coverage data, Form 5A, Bank accounts, default position, penal/legal action initiated etc. Alternatively, the History Sheet may be maintained along with the Coverage File.
5. Supply of guidelines to establishments seeking voluntary compliance.
6. Scrutiny of proposal/voluntary compliance applications received from establishments.
7. Issue of letter allotting the Code No. of establishments within three days, by fax and speed post.
8. Allotment of EPFO business number to each establishment.
9. To ensure disposal of application for allotment of code number, a register should be maintained in the prescribed manner.
10. The allotment of code number to an establishment with full details should be fed to the computer so as to update the establishment master.
11. On assigning code number, simultaneously the accounts group should also be earmarked so as to achieve the purpose and ensure compliance.
12. While accepting the Demand Draft alongwith the application for allotment of code number, it is also necessary to collect the Form 9(Revised), 5,10, 12A upto the current month and also nomination forms of the members.
13. The receipt of these documents should be entered into computer before its transmission to accounts branch.
14. The coverage file should be reviewed and any wanting information/documents/clarification in regard to membership or the wages etc. should be obtained through correspondence and wherever required the establishment may be asked to appear for the enquiry under Section 7A and the dispute settled.
15. The services of the Enforcement Officer should not be utilized for filing deposition, presenting the case during enquiry Under Section 7A, except in case of absolute necessity and with the prior permission of the Regional Commissioner concerned.
16. Assisting the establishment in determining the dues to be deposited in different accounts through Demand Draft. Filing of separate challans for each month.
17. A register to watch the conduct of 7A enquiries till the assessment of dues should be maintained. In addition separate register for current demand and arrear demand should be maintained so as to extract the details of the amount assessed, amount realised in each month.
18. Preparation of Annexure ‘A’ is the prime responsibility of Compliance Section. This should be prepared carefully and where the visit of the Enforcement Officer to the establishment is absolutely necessary and the defaulting establishments should necessarily be included in the Annexure ‘A’. In addition, the requirement of accounts branch, if any, should also be included. The Annexure ‘A’ should be prepared preferably on weekly basis and provide for the visit of atleast 7 establishments per day. This will take care of the actual and effective inspection that can be conducted by the Enforcement Officer. The establishments listed in the Annexure ‘A’ should be supported by an authority letter for each establishment under the signature of the Assistant Provident Fund Commissioner of the circle. No Enforcement Officer is expected to visit the establishment without the authority letter. There is no regular inspection of establishments by the Enforcement Officer. The determination of dues under Section 7A also depends upon the receipt of Form 12-A from the establishments. Wherever the default in submission of Form 12A is detected through CCTS Reports, the Enforcement Officer should be directed to procure the same.
19. Registers such as Recovery Register, Register of Prosecution, Register of Tribunal cases, Register of 406/409, Register of Writ Petitions, Register of BIFR cases, Register of Attachment/Release of Properties, Claim Petition Register, Register on 8F cases, Register on 110CrPC cases are to be kept and updated.
20. Generation of reports on compliance from the computer through CCTS Software.
21. Forwarding of letter and damages statements (including 7Q) to the establishment.
22. Issue of summons, assessment order etc.
23. The CCTS report should be thoroughly scrutinized with the assistance of Enforcement Officer before its release.
24. To ensure prompt action in collecting the Form 12A through Enforcement Officer, after 15 days of issue of 7A orders letter to banker should be sent under Sec.8F wherever due.
25. To ensure filing of complaints under Sec.406/409 of IPC.
26. Invoking the provisions of the Section 8B, issue of authority letters etc.
27. Transfer of current demand to arrear demand on first April of each year.
28. To assist the Assistant P.F. Commissioner in conducting minimum number (i.e.50) of 7A enquiries and also to assist the maintenance of DCB register at his level.
29. Pursue Court cases and furnishing parawise comments promptly.
30. To obtain the list of inoperative establishment and to follow it up through the Enforcement Officer for securing compliance.
31. The floppy on IEMS progress should be sent to Head Office every month .
32. Identifying the closed establishment in the Computer under category 88.
33. Furnishing of statistical data on various enforcement activities, submission of returns and reports.
34. The Enforcement Officer is expected to visit the office on weekly basis and meet the Assistant Provident Fund Commissioner concerned and to submit the Annexure ‘B’ and discuss the issues for follow up action. On receipt of the Annexure ‘B’ from Assistant Provident Fund Commissioner with his remarks and directions, follow up action should be taken by the compliance section immediately.
35. Tackling of defaulters: It should be the prime concern of the Compliance Section. All the defaulting establishment should be got inspected for the purpose of conduct of 7A enquiries. With reference to Forms 12A, (after due scrutiny and acceptance) on the day of enquiry the assessment order is to be finalised, irrespective of the fact that whether the employer appears or not. The Drill prescribed for the conduct of 7A enquiry, maintenance of DCB Register and watching of acknowledgement on 7A order etc. should be closely monitored by the Compliance Section. After 15 days from the date of issue of 7A order the file should be reviewed with reference to 7A register for follow up action. Action should be initiated under Section 8F and to direct the Enforcement Officer to lodge a complaint under Section 406/409 for defaulting employees’ share of provident fund contributions. Depending upon the gravity of the case all penal action should be initiated on due date and to determine whether the dues are realizable or unrealizable.
36. Realisation of dues through Section 8F should be closely watched. Court cases and prosecution cases should be pursued closely. All legal cases should be
reviewed every month. The data for ABP Return should be extracted only from the concerned registers kept in the Compliance Section. These registers should be closed on monthly basis under the signature of Assistant Provident Fund Commissioner. The cases that are pending with the EPF Tribunal and Consumer Forum etc. are to be examined for follow up action.
37. All Court cases should be attended by the Enforcement Officer and the Report obtained for updating the History Sheet. At the end of each month a report from the Enforcement Officer is required to be obtained to determine the follow up action taken on the defaulters and realisation of current and arrear demand etc. Wherever the penal damages and interest under Section 7Q are to be realized the Enforcement Officer should be deputed and action initiated.
38. Unless the compliance is secured by the Compliance Wing it may not be possible for the accounts branch to give compliance by issuing the Statement of Accounts etc on due dates. Thus the successful functioning of an office is solely depending upon the effective role of officials in the Compliance Wing.
3
ROLE OF APFCs COMPLIANCE
Issue of Annexure ‘A’ (copy enclosed) alongwith the authority letter, (duly signed by the Asst. Commissioner) to the EOs with reference to CCTS report, IEMS report, defaulters list, major defaulters, Defaulters current and arrear demand, non-submission of Form 12A, non-submission of Form 3A and 6A, Pending Court case etc. This should be sent for a week/15 days.
The EO on his visit to the office on weekly day should handover the Annexure B alongwith the acknowledgement on the authority letter issued to the establishment to the Assistant Commissioner. It is desirable to collect the tour diary also from the EO, on weekly basis.
To submit the Annexure ‘B’ (copy enclosed) to the Assistant Commissioner on the day of EOs visit so as to provide necessary guidance to EOs for further follow up action.
To review the performance of EO, a review report is to be obtained in the format suggested (enclosed)
The response from employers on CCTS report should be carefully examined and necessary action to be taken.
To display the top ten major defaulters of the office, duly updated every month. Similarly the model employers list (numbering ten) should also be displayed and this should be communicated to the accounts group for extending speedy service and issue of PPO and other benefits on the day of superannuation of the PF members.
The penal damages section should maintain the register for issue of notice with reference to CCTS report, conduct of enquiry, issue of levy order, watching of compliance through schedule of receipts and to take follow up action with reference to current and arrear demand through EOs maintaining the summary register to show the number of enquiries conducted, amount levied, amount realized etc. While levying damages the amount due towards 7Q reflected through CCTS report should also be conveyed to the employers.
The amount of interest under Section 7Q with effect from 1.7.1997 should also be watched for its realization.
A separate review should be under taken in respect of past cases, i.e. with effect from 1.7.97.
To furnish the MIS/ABP(revised) return to the MIS section accurately.
The dues towards pension contribution from the exempted establishment should not be clubbed with the amount due from the exempted establishment to the Board of Trustees.
A proper monitoring should be kept on the exempted establishments on PF/Pension/EDLI duly maintaining a register.
The monthly and annual report should be watched properly and follow up action to be taken.
The clarification etc. sought for by the establishment should be dealt on priority.
Action under Section 7A, 14B and other penal provisions should be initiated promptly in respect of exempted establishments.
The intelligence wing of the enforcement should be geared up; the references received should be given due importance and priority.
All applications under Section 1(4) should be scrutinised and forwarded to Head Office.
To enable Regional Commissioner to have a supervisory check on 7A orders and other enforcement areas necessary assistance should be extended duly submitting the files for verification/scrutiny.
All the exempted establishments should be inspected only at the level of Assistant Commissioner, no Enforcement Officer should be deputed for this work directly or to assist the Assistant Commissioner.
As there is a ban on issue of relaxation under Para 79 of EPF Scheme, an establishment seeking exemption should comply as an unexempted establishment till the establishment is notified, granting exemption. However, specific cases of intricate nature should be dealt as per the guidelines issued by the Head Office.
To maintain the establishment files properly and to ensure updation of Form 5A in respect of each establishment.
To provide necessary assistance to the EOs in performing recovery action promptly.
To maintain the DCB register for inspection charges preferably through computer.
The work ‘Compliance’ means and includes –
“Compliance on the part of the employer in terms of payment of dues and submission of returns” and
“Compliance on the part of EPFO in compilation of annual accounts and issuance of annual PF statement through Form 23”
Since the progress on IEMS is monitored through Computer and special efforts should be made to secure compliance.
The collection of Form 12A to the extent of 90% of the establishment is the responsibility of the Assistant Commissioner. The Enforcement Section should assist him in complying this direction of the Head Office and to meet the requirement, the service of the Enforcement Officer should be availed with positive result.
The prompt submission of monthly and annual returns by the establishment is the responsibility of the Enforcement Officer and the Enforcement Section.
Any omission in this regard cannot be categorised as ‘employers fault’, but the ‘fault of Enforcement Section’.
CATEGORIZATION OF ESTABLISHMENTS
All the establishments covered and members serviced have been categorized on the following basis.
Operative Establishments – Establishments having at least one member with balances in his account.
Inoperative Establishments – Establishments which have no connected records for members in the members master database in the computer system or establishments which do not have even a single member with any balance in his account.
Active Members – Members having some balance in their account and in whose case contributions have been received at least once in the last three years.
Inactive Members – Members having some balance in their accounts but in whose case no contributions have been received at least once in the last three years.
Non Existing Members – Members in whose respect no records are available in the member master file viz. those members in whose case no contribution has ever been received.
The software classified the establishments and members into following three categories.
Category -1(Inoperative/Non Complying Establishments)
The expression refers to all the un-exempted Establishments covered on or prior to 31.03.2002 but has NO membership as on 31.03.2003. This may be either due to the non-compliance by the establishments from the date of coverage or due to the default in updation of accounts by the field office concerned from the year of coverage.
Category – 2(Operative Establishments with stagnated compliance)
The expression covers all the un-exempted Establishments with membership but with stagnated compliance for the last three accounting years i.e., from 2000-2001 onwards and hence, annual accounts are NOT updated beyond 1999-2000.Category – 3(Operative Establishments with continued compliance)
The expression includesAll the un-exempted establishments with membership where annual accounts are updated at least up to 2000-2001.
All the un-exempted establishments covered during the period from 1.4.2002 to 31.3.2003 for which the annual updation is expected during the financial year 2003-2004.
Category – 9(Closed/defunct/In-actionable) Establishments
The term refers to all the establishments which are certified to be defunct/closed/in-actionable after due verification. These establishments are identified by the specified codes (101 to 109) fed in to the establishment master.
ENFORCEMENT OFFICERS PERFORMANCE REVIEW BEFORE APFC AND RPFC (weekly)
E.O.’S NAME | REVIEW PERIOD | CIRCLE | ACCOUNTS GROUP | | |
---
CONTRIBUTION & | ARREAR DEMAND CURRENT DEMAND
OTHER DUES | | Due | | Collected | | Balance | (Also review of | top 10 defaulters) | ---
--- PENAL DAMAGES & 7Q | ARREAR DEMAND CURRENT DEMAND
| P.D. 7Q P.D. 7Q | Due | | Collected | | Balance | ---
NO. OF DEFAULTERS | NON SUBMISSION NON REMITTANCE
WITH REFERENCE TO | OF F/12-A OF DUES
CCTS REPORTS | (including current | month) | Due | | Collected | | Balance | ---
8F ORDERS | NO. OF ESTABLISHMENTS
| Due | | Issued | | Balance to be issued | | Balance to be realized | | --- ACTION U/S 8B | Due | | Action taken | --- CASES PENDING – COURT/ | (furnish details)
TRIBULAN / CONSUMER | FORUM | | | | Progress | | --- NON SUBMISSION OF |
FORM 3A & 6A BY THE |
ESTABLISHMENTS | | Due | | Received | | Balance with action taken |
---
IEMS |
| Due for compliance | | Secured | | Closed Report | | Balance | | --- VISIT TO ESTABLISHMENTS | Due as per ANNEXURE A - | | Visited w.r.t. ANNEXURE B - | --- (ENFORCEMENT OFFICER) REVIEWED APFC RPFC
2 3 N a m e o f th e E .O . A N N E X U R E -A D u ty A ss ig n ed f o r th e w ee k F ro m _ _ _ _ _ _ _ _ _ _ _ T o _ _ _ _ _ _ _ _ _ _ C O M P L IA N C E C IR C L E _ _ _ _ _ _ _ _ _ _ _ _ _ _ S .N o . C o d e N o . N am e an d a d d re ss o f th e E st ab li sh m en t N at u re o f th e w o rk t o c o m p le te d b y t h e E .O . D et ai ls o f A ct io n t a k en b y t h e E .O . w it h S u p p o rt in g R e p o rt s o f I. R ./ C o v . P ro p o sa l et c. R em ar k s 1 2 3 4 5 6 N O T E : T h is f o rm at w il l b e co m p le te d i n t ri p li ca te 2 c o p ie s w il l b e h an d ed o v er t o t h e E O w h o w il l co m p le te t h e as si g n ed w o rk a n d r et u rn o n e co p y d co m p le ti n g c o lu m n 5 & 6 s u p p o rt ed b y I n sp ec ti o n R ep o rt , P ro se cu ti o n P ro p o sa l, C o v er ag e m em o , et c. a n d a n y o th er d o cu m en ts r eq u ir ed E st t. w d et ai ls i n A n n ex u re ‘ A ’ (o n e sh ee t sh o u ld b e u se d f o r o n e co d e n o .) s h o u ld b e su b m it te d a lo n g w it h t h e re p o rt .
2 4 A N N E X U R E N A M E O F T H E E .O .: C O M P L IA N C E C IR C L E -1 /C IR C L E -2 D U T Y A S S IG N E D F O R T H E W E E K F R O M _ _ _ _ _ _ _ _ _ _ _ _ _ _ T O _ _ _ _ _ _ _ _ _ _ _ C O D E N O .: N A M E A N D A D D R E S S O F T H E E S T A B L IS H M E N T : N A T U R E O F T H E W O R K T O B E C O M P L E T E D B Y T H E E .O . D E T A IL S O F A C T IO N T A K E N B Y T H E E .O W IT H S U P P O R T IN G R E P O R T S O F I .R . R E M A R K S . N O T E : T h is f o rm at w il l b e co m p le te d b y t h e E .O . S ep ar at e sh ee t sh o u ld b e u se d i n r es p ec t o f ea ch e st ab li sh m en t d u ly s u p p o rt ed b y i n sp ec ti o n r ep o rt , in v es ti g at io n p ro fo rm a, p ro se cu ti o n p ro p o sa l, e tc .
4
COMPUTERISED COMPLIANCE TRACKING SYSTEM- CCTS
OBJECT AND SCOPE:
Doubts were being expressed on the number of establishments under the purview of the EPF & MP Act 1952 and the membership therein reported by the Organisation. The reporting method being followed by the Organisation had largely been manual and prone to errors. There was no scientific tool to arrive at the correct statistics. It was against this background that a “System Assisted Membership Audit Software” was conceived and developed at the Head Quarters Office in 1999-2000 to arrive at the correct statistics in relation to the establishments covered by Employees’ Provident Fund Organisation and membership therein. An elaborate exercise was mounted to obtain the relevant databases from the field offices and the same were processed through the said software.
The results thrown by the audit exercise compelled a thorough analysis of the reasons for the poor compliance status from the un-exempted establishments. The analysis broadly indicated that:
• There has been a steady deterioration over a period of years in the basic function of maintenance of DCB Register, which was key for early default detection and remedial action; this must have been the most significant factor which resulted in the current state of poor compliance.
• The Accounts Groups to whom the ownership of DCBR is given, were made responsible for the timely detection and communication of the defaults to the compliance wing on monthly basis; the duty which was honoured in exception rather than as a rule. Ideally, the compliance wing should not have been made dependent on the Accounts Groups for detection and communication of defaults.
• The fact that the computerization in the EPFO effectively disregarded this vital function, must have contributed to the situation, thus leaving enough scope for fraudulent practices.
Consequently, a DCBR Software package for computerised maintenance of DCB Register was developed in-house and was distributed to all the field offices in May 2000. The scope and functionality of the software was enhanced and CCTS Software Version 1.0 was distributed in October, 2000. To ensure its effective implementation, eight workshops were conducted on Zonal basis (two each at Calcutta and NATRSS, New Delhi and one each at ZTI, Chennai, Ahmedabad, Ujjain and Regional Office, Hyderabad) where the functionaries of the field offices from compliance and EDP wings were given sufficient exposure.
During the last one year of implementation of CCTS, constructive feed back has been received from various field offices.
The functionality of CCTS Version 2.0 broadly encompasses the following aspects.
System assisted DCBR maintenance duly supported by dealing assistant wise monthly DCBR and establishment wise yearly DCBR. This function includes the basic audit function on monthly returns and remittances.
System assisted remittance monitoring where by the actual remittances received are judged against the expected remittances and the exceptions are reported.
System assisted Compliance tracking duly supported by necessary monitoring reports to the compliance circles and Accounts Groups and also monthly communications to the defaulting employers.
Establishing a scientific information cum monitoring tool both for the field offices as well for the Head Quarters Office (the functionality of erstwhile IEMS software has been merged into the CCTS Version 2.0)
System Assisted Compliance Audit function in terms of Head Quarters letter No.E.III/18(9)2001/Compliance/2001 Dated 16.8.2001 and E.III/18(9)2001/ Compliance 2001 dated 31.8.2001.
System Assisted preventive vigilance function in a limited sense (by generating exception statements/communications).
CCTS – PREPARATORY ACTION
1. ADDRESS FIELDS OF MODULE 105, CAPS/CAMPS, 95 WITH PIN &
DISTRICT FIELD IS UPDATED IN RESPECT OF EACH
ESTABLISHMENT.
2. CORRECT CIRCLE NO. IS GIVEN – MODULE 115
3. INOPERATIVE ESTABLISHMENTS ARE ENTERED AS 88(CIRCLE NO.)
4. RATE OF CONTRIBUTION IS CORRECTLY FILLED IN.
5. EXEMPTION STATUS IS CORRECT OF EACH ESTABLISHMENT
UNDER “ESTABLISHMENT CATEGORY”.
6. D.O.C. IS CORRECTLY ENTERED IN MODULE 105.
7. NAME/DESIGNATION/TELEPHONE NO. OF ASSESSING OFFICER
ENTERED IN MODULE 12O.
8. IN-ACTIONABLE ESTABLISHMENT STATUS UPDATED IN MODULE 110 WITH REFERENCE TO CORRECT CODE.
S.NO. CAT-I ESTABLISHMENTS WHERE NO ACTION LIES CODE
1. ESTABLISHMENTS CERTIFIED AS CLOSED AFTER 101
DUE VERIFICATION
2. ESTABLISHMENTS ALREADY DE-COVERED IN THE 102
PAST.
3. ESTABLISHMENTS GONE OUT OF THE PURVIEW OF 103
THE ACT SUBSEQUENT TO THE COVERAGE
4. DUMMY ESTABLISHMENTS CREATED FOR PRACTICAL 104
SITUATIONS INCLUDING RECORDS WHICH ARE CREATED BY MISTAKE /DATA ENTRY ERRORS.
5. ESTABLISHMENTS EXCLUDED UNDER SECTION 16 105
6. ESTABLISHMENTS WITH ALL THE ACCOUNTS 106
ALREADY SETTLED AND NO LONGER IN EXISTENCE
7. ESTABLISHMENTS PERTAINING TO OTHER FIELD 107
OFFICES OF THE REGION.
8. SECTION 2A ESTABLISHMENTS (BRANCH ESTA- 108
BLISHMENTS) IN RESPECT OF WHICH COMPLIANCE IS REPORTED TO DIFFERENT FIELD OFFICE
9. ESTABLISHMENTS WHERE APPLICATION OF THE ACT 109
HAS BEEN JUDICIALLY STAYED
10. CORRECTNESS OF DATA ENTRY IN CRAS - 100%
11. SUPPLY WORK LOAD TO DEALING ASSISTANT IN ACCOUNTS & COMPLIANCE CIRCLE THROUGH MODULE 810
12. ACCOUNTABILITY FOR DATA ENTRY ERRORS – D.E.O./L.D.C.
ACTIVITY SEQUENCE – II (REGULAR/RECURRING TASKS)
ACTIVITY SEQUENCE – III (PERFORMANCE MANAGEMENT (RO & HQ) -REPORTS)
ACTIVITY SEQUENCE – IV COMPLIANCE AUDIT OPERATIONS
ACTIVITY SEQUENCE – V FUNCTIONAL RESPONSIBILITIES IN EDP
