Companies to file Return for Delayed Payment to MSME

CA Sagar Gambhir

♦ Brief Background

The Central Government under section 9 of Micro, Small and Medium Enterprises Development Act, 2006 (MSMEDA-2006) empowers to issue notification, programmers, guidelines and instructions for the promotion and development of the competitiveness of micro, small and medium enterprises.

Using the powers mentioned under section 9 of MSMEDA-2006 the ministry of micro, small and medium enterprise issued the notification S.O. 5622(E) dated 2nd November 2018, wherein all the companies dealing with such enterprises were required to fill return to Ministry of Corporate Affairs stating the following details:

1. The Amount payments due; and

2. The reason of the delay.

♦ Notification for MSME Form 1

With reference to the notification issued by MEMEDA-2006, Ministry of Corporate Affairs on 22nd day of January 2019 issued notification no. S.O. 368(E) under which Ministry of Corporate Affairs using the power define under section 405 of Companies Act, 2013 Central Government make order called as “Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019”. Under this order every specified company is required to file MSME Form I.

♦ What is MSME FORM I return?

MSME Form I is the half yearly return to be filled by every specified company with the Registrar of companies. This return contain detail of all the outstanding payments to the micro and small for the goods and services supplied by them. All the payments which is due from more than 45 days needs to be reported under this return.

♦ Details to be covered under MSME form I

Apart the basis details required of reporting entity, form MSME – I also required details related to:

(a) the total amount of payment due; and

(b) the reasons for the delay;

The above-mentioned detail is required to be provided in below tabular format.

Financial Year/Particulars	Name of suppliers	PAN of suppliers	Amount Due	Specify the date from which amount is due	Reason of Delay

♦  Due dates of MSME FORM I

As per the specified companies (Furnishing of information about payment to micro and small enterprises supplier) order, 2019 following are the due dates for MSME Form I

1. Initial return – with 30 days of publication of notification (i.e. 21st Feb 2019)

2. Half Yearly Return

• Half yearly for the period April to September – 31st October
• Half yearly for the period October to March – 30th April

♦ Who is specified company for MSME FORM I

All the companies will have to file MSME – 1 if following conditions are satisfied.

1. Who get supplies of goods or services from Micro and Small Enterprises and

2. Whose payments to Micro and Small Enterprises Suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services

Such companies will be called as specified companies.

♦  ROC Form/Utility

Not Yet Launched

♦  Micro and small companies are covered and not medium enterprises

As per the notification, outstanding dues to only Micro and small enterprises will have to be reported. As per MSME Act following table will be help full to understand the difference between Small, Micro and Medium enterprises.

Type of enterprises	Investment in Plant & Machinery		MSME-1 applicability
	Manufacturing activities	Services activities
Small enterprises	Up to 25 lacs	Up to 10 lacs	MSME-1 applicable
Micro enterprises	More than 25 lacs but up to 5 crore	More than 10 lacs but up to 2 crore	MSME-1 applicable
Medium enterprises	More than 5 crores but up to 10 crores	More than 2 crores but up to 5 crore	MSME-1 not applicable

♦  How to calculate 45 days for outstanding

As per Explanation given under Sec 2(b) of The Micro, Small and Medium Enterprises Development Act, 2006,the day of acceptance or the day of deemed acceptance has been explained as below.

THE 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;

THE DAY OF DEEMED ACCEPTANCE means, –

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, the day of the actual delivery of goods or the rendering of services;

♦  Bifurcate the Creditors as per following Chart–

1. Creditors Outstanding as on 21/01/2019 for more than 45 Days .

2. Out of Outstanding for more than 45 Days as above, Check List of Creditors which are Micro & Small Enterprises (Not Medium & Large Enterprises) as per MSME Act.

3. Out of Micro & Small Enterprises Creditors above, check List of Creditors which are Manufacturing & Service Concerns (Traders are not to be Reported in MSME Form)

4. For Creditors as per Point 3, detail is required to be provided in tabular format as given above.

♦ Penalties for non filing of MSME-01 Form

As per section 405(4) if the companies fail to comply with as order or knowing furnishes or statistics which is incorrect or incomplete in any material respect, the company will be punishable as given in below table.

In other words, non-filing of MSME – 01 form or giving incorrect or incomplete form in any material aspect, following penalties may be levied for MSME-01 Form

Particulars	Penalty
on defaulting company	Extended up to Rs. 25000
On Every officer who is in default	Minimum fine Rs. 25,000 which may extend to Rs. 3,00,000 orImprisonment which may extended to 6 months. or both

♦  What’s Benefit to Micro & Small Concerns

Quick Payments: Micro & Small Concerns can get Quick Payment of Due Bills within 45 Days.

Even Chartered Accountants can get Aadhar Udyog Registration/MSME and get benefit available under this regime.

Benefits from Banks: All banks and other financial institutions recognize MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment.

Tax Benefits: Depending on your business, you may enjoy exemption from certain direct taxes in the initial years of your business.

Benefits from State Governments: Most states offer those who’ve registered under the MSME Act subsidies on power, taxes and entry to state-run industrial estates.

Benefits from Central Government: The central government, from time to time, announces schemes to benefit MSMEs, such as the credit guarantee scheme:

♦  How to Register as MSME / Aadhar Udyog

Register on www.udyogaadhar.gov.in

It’s recommended to all Chartered Accountants to popularize the benefits available for MSME Concerns & register their Clients to avail the same.  

Please refer all the relevant section, rules, notifications, amendments as applicable. The Author is not responsible for any losses incurred. Content is merely for sharing knowledge. Author can be reached at casagargambhir@gmail.com or +91-87290-42600 for any queries/recommendations