Electronics shop repairing and servicing elecrtrical goods is factory under ESI Act : SUPREME COURT

Contents News/Article Date: 12th August 2023 Relating to which Act: The Employees’ State Insurance (ESI) Act, 1948 Penalty under the Act: Section 85(a): Penalty for failure to pay contribution Non-payment of this contribution is a serious offense because it directly affects insurable employees. Hence, the maximum imprisonment for this offense is 3 years and the minimum is 6 months with Rs. 5,000 as fine. Applicable to which State: All the States and Establishments covered by the ESI Act Type: Supreme Court Judgement: The Supreme Court bench comprising Justices Hima Kohli and Rajesh Bindal was hearing an appeal against the Karnataka HC judgment which confirmed ESI Court’s finding that the ESI Act would be applicable to the firm. Pertains to: Electronics Shop Repairing and Servicing electrical goods Relevance of this news: Karma Global is in the business of HR Services, Payroll, Outsourcing and Regulatory Compliances right from its inception in 2004 and since then, has brought in a lot of efficiencies and technological upgradations with experts on its roll, to ease the hassles of Payroll Processing, Temp Staffing, On-boarding, Employee Life Cycle, Statutory, Regulatory and Payroll compliances by providing customized solutions to all its elite clients. Karma Global does excellent work on providing ESI Services both to establishments as well as Insured Employees and in this respect, it will inform all its clients and insured employees about the many announcements that the Government has made in terms of expansion of ESI Scheme, so as to make it available in the remotest of places viz. 744 districts and also to make health facilities and medical colleges in progressive districts of our country further expanding post graduate medical seats. And in this instance: The Supreme Court recently held that the electronic goods shop which sells goods and repairs/services such goods can be said to be engaged in a “manufacturing process” using “power” as defined under ESI Act and Factories Act, 1948. The Supreme Court bench comprising Justices Hima Kohli and Rajesh Bindal was hearing an appeal against the Karnataka HC judgment which confirmed ESI Court’s finding that the ESI Act would be applicable to the firm. Subject: Electronics Shop Repairing & Servicing Electrical Goods Is “Factory” Under ESI Act: Supreme Court

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Electronics Shop Repairing & Servicing Electrical Goods Is “Factory” Under ESI Act: Supreme Court Suraj Kumar

The Supreme Court recently held that the electronic goods shop which sells goods and repairs/services such goods can be said to be engaged in a “manufacturing process” using “power” as defined under ESI Act and Factories Act, 1948. The Supreme Court bench comprising Justices Hima Kohli and Rajesh Bindal was hearing an appeal against the Karnataka HC judgment which confirmed ESI Court’s finding that the ESI Act would be applicable to the firm. The Court opined that the firm's utilization of electrical energy for repairing electrical goods would make it fall within the definition of “power” used in the “manufacturing process” under both the ESI Act and Factories Act,1948. The court noted that section 2(14A) of the ESI Act mentions the term manufacturing process and relies on its definition given under section 2(k) of the Factories Act, 1948. Interestingly, the word Manufacturing process also includes “repairing” any article for its use. The Court observed “The appellant firm is in the business of selling electrical goods in a shop. Admittedly, the shop premises are used not only for selling goods, but also to service electrical goods. That being the position, it is clear that the appellant firm falls under the definition of a “Factory” and is using a “manufacturing process”, as contemplated under both the Statues.” The appellant had contended that it was no that it was not manufacturing any goods with the aid of “power” as defined under the ESI Act. The court referred to the term “power” mentioned under mentioned under section 2(15) (C) of the ESI Act which is defined under section 2(g) of the Factories Act, 1948. The Court noted that “power” means where any electric energy is transmitted”. So, it was convinced that when electric energy is used for the repair of goods, it can be said to be using “power” as contemplated under the said Acts.

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