The High Court of Karnataka has made the observation that Form-16C cannot be used to prove the employer-employee relationship between the assessee company and a contractual/freelance labourer. The Single Bench of Justice Suraj Govindaraj made this observation while considering a writ petition regarding the applicability of Employees Provident Fund and Miscellaneous Provisions Act, (EPF Act) 1962.
The Petitioner filed a petition under Section 26-B of the Employee Provident Fund Scheme, 1952 to determine the issue of applicability of the EPF Act, with the third respondent, a contractual employee who has signed a contract with the petitioner, M/s Express Communications (Madurai) Pvt Ltd.
The petitioner is a company engaged in the publication of newspapers and the 3rd respondent is a freelance photographer.
The counsel for the petitioner submitted that there is no employer-employee relationship between the petitioner and the 3rd respondent. During said submissions, it was claimed by the petitioner that there is no supervisory control or disciplinary actions in the contractual labour involved with the petitioner.
The differences between regular and contract employees were pointed out by the petitioner counsel in detail. The nature and mode of deduction made under the Form 16 was also submitted to be different for contractual employees.
The observation of the court was made as– The deduction which is made in terms of the Form-16 of the Income Tax Act, 1961 insofar as the regular employee is considered. For a contractual employee, the usage of Form 16 A and Section 194(c) of the Income Tax Act was to be used.
It was observed that in this case, the respondent 3, a freelance photographer, cannot be held as an employee of the petitioner merely on the basis of the submission of Form 16C or Form 16 for that regard. A similar observation was made by the Delhi High Court in KAUSHAL KISHOR SINGH Vs SITA KUONI WORLD TRAVEL INDIA LTD [2022 TAXSCAN (HC) 709].
The appeal of the petitioner was dismissed with no intervention from the court for lack of grounds and the 3rd respondent was directed to enrol under the Provident Fund Scheme (PPF) of the Central Government for now.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates.
