The Ministry of Micro, Small and Medium Enterprises (MSME) had vide notification dated 2nd November 2018 directed all companies, who get supplies of goods and services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or deemed acceptance to file a half yearly return with the Ministry of Corporate Affairs (MCA) stating the amounts due and the reasons for delay.
Subsequently, the MCA had vide notification dated 22nd January 2019 (hereinafter referred to as “MCA Notification”) issued under Section 405 of the Companies Act, 2013, directed all specified companies to file form MSME-I (hereinafter referred to as “the Form”). The aforesaid requirement is applicable only to “Specified Companies” as defined under MCA notification:-
i. Companies which get supplies of goods and services from Micro and Small enterprises and
ii. Whose payments exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services as per provisions of Section 9 of the Micro Small and Medium enterprises Development Act, 2006 (MSMED Act)
The MCA notification requires the following:-
The companies should file, the MSME Form I detailing all the outstanding/ dues against the Micro or small enterprises suppliers that are existing on the date of notification of the related order within 30 days from the date of deployment of E-form MSME-1 on the MCA Portal.
This return is to be filed by the end of the month succeeding the end of half year. The half year for this purpose shall be April to September and October to March and the due dates shall accordingly be 31st October and 30th April respectively.
Micro and small enterprises refer to any class or classes of enterprises, whether proprietorship, Hindu Undivided Family (HUF), Association of Persons (AOP), co-operative society, partnership firm, company or undertaking or any other name assigned to it. If such entities are in pursuit of the manufacture or production of goods, it must satisfy the following conditions:
Manufacturing enterprises, to be classified as micro, must have made an investment in Plant and Machinery of INR 25 lakhs or lower. On the other hand, entities of the service sector must have invested a sum of INR 10 lakhs or lower in Equipments.
Manufacturing enterprises would be classified as small for this purpose if its investment in Plant and Machinery exceeds INR 25 lakhs but is limited to INR 5 crores. On the other hand, enterprises in the service sector would be classified as small if their investment in Equipment exceeds INR 10 lakhs but is limited to INR 2 crores.
i. The details of outstanding dues to Micro and Small enterprises are required to be filed and not details of outstanding dues to medium enterprises.
ii. The MCA notification is applicable only when a Company falls under the category of a Specified Company. For instance, if the Company has outstanding dues to 10 MS suppliers and the dues to one supplier is outstanding for more than 45 days and the dues to balance nine suppliers is outstanding for less than 45 days, then the details of outstanding dues to all the 10 MS suppliers would have to be filed. However, if the dues to all 10 suppliers are outstanding for less than 45 days, then the Company would not be classified as a “specified company” for the purposes of this notification and hence the said Form would not have to be filed.
iii. The relevant date for deciding the amount outstanding for more than 45 days shall be 22 January 2019 (one-time) and 30th September and 31st March of each half year respectively.
iv. The assessment would have to be done for each supplier individually.
Consequences of Non-Compliance:
If any company fails to comply with an order made, or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect, the company shall be punishable with fine which may extend to INR 25,000/- and every officer of the company who is in default, shall be punishable with imprisonment for a term which may extend to 6 months or with fine which shall not be less than INR 25,000/- but which may extend to INR 3,00,000/-, or with both.
There are many compliance and forms for the company under the provisions of The Companies Act, 2013. The MSME Form – I is an additional burden of compliance thereby reducing the Ease of doing Business.