Demand and penalty based on wage statements fail when ESI and Provident Fund returns remain unchallenged and evidence is only inferential.

Demand and penalty based solely on a wage statement could not stand where the defence founded on ESI and Provident Fund returns had already been accepted and remained unchallenged. With that defence accepted, the only material left was a wage-based statement, and the liability was inferred from surmise and conjecture rather than proved facts. The Tribunal therefore treated the Collector's order as unsustainable because it lacked reliable evidentiary support. The demand and penalty were held unsustainable, and the appeal failed.

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Issues: Whether the demand and penalty based on the wage-based statement, in the absence of any challenge to the acceptance of the defence based on ESI and Provident Fund returns, could be sustained.

Analysis: The only surviving material after acceptance of the defence regarding ESI and Provident Fund returns was the statement prepared on the basis of wages paid. On that material, the demand rested only on inference and conjecture. The Tribunal had found the Collector's order unsustainable as it proceeded on surmises and conjectures.

Conclusion: The demand and penalty were not sustainable and the appeal failed.

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