CS Saurabh Arora
The Ministry of Micro, Small and Medium Enterprises issued a notification on November 2, 2018, which prescribe half-yearly reporting to Ministry of Corporate Affairs (MCA) for the Companies which receives services or goods from micro or small enterprises and whose payments to micro and small enterprises suppliers exceed 45 days.
The legal text of the notification is stated below for your reference:
In exercise of the powers conferred by Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006, (the “Act”) the Central Government hereby directs that all Companies who get supplies of goods or services from the micro and small enterprises and whose payments to micro and small enterprises suppliers exceed forty five (45) days from the date of acceptance or date of deemed acceptance of the goods or services as per the provisions of the Act, shall submit a half yearly return to the Ministry of Corporate Affairs (“MCA”) stating the following:
(a) The amount of payments, and
(b) The reason of delay.
ANALYSIS OF AFORESAID LEGAL TEXT OF NOTIFICATION DATED NOVEMBER 2, 2018:
Page Contents
1. Definition of Micro Enterprises:
Section 2(h) of the Act provides that micro enterprise means an enterprise classified as such under sub-clause (i) of clause (a) or sub-clause (i) of clause (b) of sub-section (1) of section 7.
(a) sub-clause (i) of clause (a) of sub-section (1) i.e. section 7(1)(a)(i):
Micro Enterprise means an enterprise engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 and investment in plant & machinery doesn’t exceed more than twenty-five lakh rupees.
(b) sub-clause (i) of clause (b) of sub-section (1) i.e. section 7(1)(b)(i):
Micro Enterprise means an enterprise engaged in providing or rendering services and investment in equipment doesn’t exceed more than ten lakh rupees.
2. Definition of Small Enterprises:
Section 2(m) of the Act provides that small enterprise means an enterprise classified as such under sub-clause (ii) of clause (a) or sub-clause (ii) of clause (b) of sub-section (1) of section 7.
(a) sub-clause (ii) of clause (a) of sub-section (1) i.e. section 7(1)(a)(ii):
Small Enterprise means an enterprise engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 and investment in plant & machinery is more than twenty-five lakh rupees but doesn’t exceed five crore rupees.
(b) sub-clause (ii) of clause (b) of sub-section (1) i.e. section 7(1)(b)(ii):
Small Enterprise means an enterprise engaged in providing or rendering services and investment in equipment is more than ten lakh rupees but doesn’t exceed two crore rupees.
3. Definition of the Day of Acceptance:
Explanation (i) to Section 2(b) of the Act provides that day of acceptance means:
(a) the day of the actual delivery of goods or the rendering of services; or
(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier
4. Definition of the Day of Deemed Acceptance:
Explanation (ii) to Section 2(b) of the Act provides that day of acceptance means the day of the actual delivery of goods or the rendering of services, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services.
From the above it is clear that we need to look at each and every aspect of the notification before finalizing reporting data. It is also highlighted here that MCA has not yet notified any form for aforesaid reporting and we will update you once any reporting mechanism is defined by the government.
Previous articles of the Author
Detailed Note on CSR Provisions under Companies Act, 2013
Section 139 with Special Reference to Transition Period of 3 Years
(Author can be reached at [email protected])
