HITECH INDIA PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Common questions of law are urged in these writ petitions, so they are heard together and are being disposed of by a common judgment. For appreciating the facts which give rise to the questions referred to hereunder it will be enough to refer to the fact in WP No. 7516 of 1992 which are representative of the facts in the other writ petitions.

(2.) The petitioners are challenging the constitutional validity of s. 43B and s. 36(1)(va) of the IT Act, 1961, in so far as they provide for disallowance of the employer's contribution to provident fund, contribution to the employees' State insurance fund and the payment of employees' contribution to the provident fund and contribution to the employees' State insurance fund when the same are paid after the due dates in the respective Acts.

(3.) The petitioner is a private limited company. It is engaged in the business of manufacture and sale of electronic connectors for the defence sector and it is registered as a small scale industry. It is an assessee under the IT Act. The petitioner has employed about 400 persons in its establishment. It is covered by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short "the EPF Act"), and the Employees' State Insurance Act, 1948 (for short "The ESI Act"). It is under an obligation to remit the employer's as well as employees' contribution under the said Acts before the date prescribed thereunder. In the asst. yr. 1991-92, it faced some difficulties in remitting the amounts on or before the specified date (hereinafter referred to as "the due date"). It states that for the month of April, 1990, to February, 1991, the petitioner paid the contribution within the same financial year, however, the dues for the month of March, 1991, had been paid on 9/04/1991, which is before the due date. There was also delay in payment of contribution under the ESI Act. Under the EPF Act, the Commissioner is authorised to impose damages on delayed payments and likewise under the ESI Act penalties can be imposed for belated payment. Under s. 43B and s. 36(1)(va) of the IT Act the amounts of contribution paid belatedly are not allowable deductions in the hands of the assessee and, accordingly in the asst. yr. 1991-92, the petitioner was not permitted to deduct the contributions amounting to Rs. 96,564. It is on these facts that the petitioner challenged the validity of the said provisions of the Act.