By registered post
Date: - -02-2017
1- The Commissioner
Social Security Institution
2- The Director
SUB: APLICATION FOR REFUND OF EXCESS AMOUNT
PAID U/S 25 OF P.E.S.S. ORDINANCE, 1965 IN THE LIGHT
OF LATEST JUDGMENT DATED 10-11-2016 PASSED BY THE
HON'BLE SUPREME COURT
We are hereby applying for refund/adjustment of excess amount paid by us in the light of the latest Judgment dated 10-11-2016 passed by the Hon'ble Supreme Court in about 122 appeals/petitions (Workers Welfare Funds Ministry of Human Resources Development Islamabad and others v/s East Pakistan Chrome Tannery (Pvt.) Ltd. and others.), on the following facts and grounds.
1- The Federal Government had adopted an easy course to amend, inter alia, labour laws not being parts of the Money Bill through the Finance Acts of 2006, 2007 and 2008. The Senate has no say on the Finance Bill and in the National Assembly debates take place only on financial proposals of the Bill, and the amendments in the labour laws get automatically passed without discussion/debate on the same along-with the financial matters of the Finance Acts.
2- This controversy was started when a DB bench of Sindh High Court in its decision dated 26-02-2011 in the Const. pet No. D-260 / 2008, Employers Federation of Pakistan & others V/s Fed. Govt. declared the amendments made in Labour laws through Finance Act, 2007 ultra-vires of the provisions of the Constitution.
3- Federal Govt. for years made various amendments by the Finance Acts of 2006, 2007 and 2008. Its details are as under:
Amendments made in Eight Labour Laws through the Finance Bill 2006
i. Workmen’s Compensation Act, 1923.
ii. Factories Act, 1934.
iii. Minimum Wages for Unskilled Worker Ordinance, 1969
iv. E.O.B. Act, 1976.
v. West Pakistan Industrial & Commercial Employment (Standing Orders) Ordinance, 1968.
vi. Company’s Profits (Workers Participation) Act 1968.
vii. West Pakistan Shops and Establishment Ordinance, 1969.
viii. Workers Welfare Fund Ordinance, 1971.
Amendments made in Five Labour Laws through the Finance Bill 2007
i. Workmen’s Compensation Act, 1923.
ii. West Pakistan Industrial & Commercial Employment (Standing Orders) Ordinance, 1968.
iii. Minimum Wages for Unskilled Worker Ordinance, 1969.
iv. Employees Old – Age Benefits Act, 1976.
v. Companies Profits (Workers Participation) Act 1968.
Amendments made in Five Labour Laws through the Finance Bill, 2008
i. Provincial Employees Social Security Ordinance,1965:
ii. West Pakistan industrial & Commercial Employment (Standing Orders) Ordinance,1968:
iii. Employees Old-Age Benefits Act,1976:
iv. Workers Welfare Fund Ordinance, 1971:
v. Minimum Wages for Unskilled Worker Ordinance, 1969
4- It may also be noted that the Labour Laws being not part of the Money Bill any amendments in the same would not go to both the houses of the Parliament but amending the same through the Finance Acts deprives the Senate it’s Constitutional right as the Senate has no say on the Money Bill / Finance Act.
5- Thereafter on the basis of the said decision in the Const. Pet No. D-260 / 2008, another Const. Petition challenged therein the Finance Act, 2008. In the decision reported at PLJ 2013 Karachi 24, (Soneri Bank Ltd. V/s Fed. of Pakistan) the DB Bench of the Sindh High Court held that the EOBI contribution is in nature of fee and not a tax and the amendments made in the EOB Act, 1976 by the Finance Act, 2008 were without lawful authority and of no legal effect and further decision of Lahore High Court in the judgment dated 19.8.2011 reported as East Pakistan Chrome Tannery (Pvt.) Ltd Vs. Federation of Pakistan and others (2011 PTD 2643).
6- Finally all the said controversies went to the Supreme Court in about 122 appeals/petitions and three Hon’ble Judges gave Judgment dated 10-11-2016 (Workers Welfare Funds Ministry of Human Resources Development Islamabad and others v/s East Pakistan Chrome Tannery (Pvt.) Ltd. and others). The judgment having far reaching effect on various amendments made by the Federal Govt. through the years by the Finance Acts of 2006, 2007 and 2008. Only some important points decided by the Supreme Court are as under:
i. Hold that the contributions made to the Workers’ Welfare Fund are not in the nature of a tax but a fee, therefore, amendment made through Finance Acts in the Workers’ Welfare Fund Ordinance, 1971 are illegal and unconstitutional and dismissed 16 Civil Appeals filed by the Workers Welfare Funds Ministry of Human Resources Development Islamabad.
ii. Hold that the five different labour laws amended by the Finance Act of 2007 including the amendment made to the Employees Old – Age Benefits Act, 1976, Workmen Compensation Act, 1923, Companies Profits (Workers Participation) Act 1968 and West Pakistan Industrial & Commercial Employment (Standing Orders) Ordinance, 1968 are related to the payments made by employers are very specific as opposed to having a generic purpose to meet the State’s expenses and can therefore by no stretch of imagination be referred to as a tax and cannot be amended through Finance Act.
iii. Lastly hold that the amendments made by the various Finance Acts of 2006, 2007 and 2008 pertaining to the subject contributions/payments do not relate to the imposition, abolition, remission, alteration or regulation of any tax, or any matter incidental thereto (tax) and all the amendments in the respective Finance Acts are declared to be unlawful and ultra vires of the Constitution.
7- Through Finance Act, 2008 amendment was made in section 2(8) (f) of the Ordinance and raised the wage limit from Rs. 5000/= p.m. to Rs. 10,000/= p.m. w.e.f 1-8-2008. We made payment of contribution on this increased wage limit which is now required to refund us by you. By implication of this change in the wage limit over and above of Rs. 5,000/= p.m ( 6% of wages up to the limit of Rs. 5000/= per month) so many employees were uncovered under the Social Security Scheme and remained covered illegally as this amendment has cumulative effect and we had paid their contribution illegally which has to be refunded.
8- Before the amendment of Finance Act, 2008, the first proviso under section 20 (1) of the PESS, Ordinance, 1965 was as under,
“provided that no contribution shall be payable on so much of an employee’s wages as in excess of two hundred rupees per day or five thousand rupees per month.”
9- In view of the above, you both are required to refund us the excess contribution paid to you by us from 1-7-2008 till any insured individual employee remained coverage limit as per section 2(8) (f) of the Ordinance with 50 percent increase thereon on the same principle as levied by you on your claim of arrears of contribution. The detail of the figures may be worked out by the Director easily from our record (already with him) and if you need any clarification or guidance please let us know in writing.
In view of the above, it is prayed that the order/direction may be
passed/issues to refund the excess amount paid by us as
provided by Section 25 of P.E.S.S.O., 1965 as
explained above or allow us to adjust the
same from contributions payable
by us hence forth in monthly
Thanking You Yours faithfully