Guidelines for Inquiry Initiation under Section 7A of the EPF Act

EPFO in its circular no. C-II/20/76/Misc./2020/CBE/TN/027 dated 14.02.2020, has issued guidelines for initiation of inquiries under section 7A of the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 in order to bring uniformity in the procedure followed.

Instructions in the Circular

Inquiries u/s 7A shall for limited purposes only i.e.

• dispute regarding the applicability of the EPF Act and/or
• determination of dues.

Therefore, grounds such as non-submission of returns, non-production of records, non-cooperation in inspections, etc. are not reasons within the sphere of section 7A and do not constitute a sufficient basis for initiating proceedings under this section.

The minimum standard of evidence for the commencement of any legal proceedings is the ‘existence of a prima-facie case’(i.e. there should be a case appears on the face of given facts and circumstances) and the same applies to proceedings u/s 7A.

Procedure for Initiation

A mere complaint in itself does not constitute prima-facie evidence; sufficient to initiate an inquiry u/s 7A as complaint and is only a source of information and not legal proof of the allegations. Therefore, any complaint is required to be investigated by an Enforcement Officer under section 13(1) of the Act and substantiated on the basis of admissible evidence gathered during an investigation.

Scope and Time Frame

The assessing officers prior to initiating an inquiry, have to record the intended period of inquiry-based on the evidence available. Subsequent to the initiation of an inquiry, the issues and the period of default specified thereunder cannot be extended and records sought from the respective employer must be reasonably limited to such scope. Any new issue or period of default arising/found subsequently may be inquired only upon issuance of a separate notice to that extent.

All inquiries initiated shall be provided with computer-generated diary numbers from the compliance e-proceedings portal and any notice served without this diary number will be treated as non-est.

To read the notification, click here.