Home  /  Code on Social Security, 2020  /  Section 126

Section 126: Determination of escaped amounts across schemes

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter XI: Authorities, Assessment, Compliance and Recovery
Competent Labour Forum
Act No. 36 of 2020
Section 125 All 163 Sections of Code on Social Security, 2020 Section 127

Legal Commentary & Landmark Judgments: Section 126

Section 126 of the Code provides for the determination of escaped amounts across social security schemes, authorizing the recovery of contributions that evaded assessment due to employer omission, misrepresentation, or failure to disclose material facts.

  • Escaped Turnover & Omission Assessment Power: Empowers the authorized officer to reassess and recover contributions where an establishment suppressed worker headcounts, disguised allowances, or misclassified employees.
  • Condition Precedent of Material Non-Disclosure: Requires tangible evidence establishing that the escape of assessment was attributable to deliberate misstatement, concealment, or false reporting by the employer.
  • Five-Year Limitation Bar Safeguard: Applies the statutory five-year limitation window to escaped assessment proceedings, protecting establishments from perpetual historical reopening.
Key Landmark Precedents:
  • E.S.I.C. v. C.C. Santhakumar (2007) 1 SCC 584: Supreme Court held that reopening past assessments requires cogent proof of escaped contributions and cannot be initiated based on mere change of opinion.
  • Hindustan Times Ltd. v. Union of India (1998) 2 SCC 242: Affirmed that regulatory agencies cannot use escaped assessment powers to bypass statutory limitation periods or cure departmental lethargy.
  • Regional Provident Fund Commissioner v. Hooghly Mills Co. Ltd. (2012) 2 SCC 489: Supreme Court affirmed that allegations of escaped contributions must be grounded in primary accounting records rather than extrapolation.
Courtroom Practice & Strategic Litigation Guidance:

If served with a Section 126 escaped assessment notice, demand production of the specific inspection material showing non-disclosure; establish that the allowances or worker categories were disclosed in past audited returns to defeat allegations of concealment.

Section 125 All 163 Sections of Code on Social Security, 2020 Section 127