In this article author answer queries related to filing of MSME-1 Form which was notified by Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019

A. If a Company falls in criteria of MSME, However not registered under MSME Act. Whether Company need to mention details of such MSME in their reporting?

As per recent Delhi High Court judgment in  M/s Ramky Infrastructure Private Limited Vs Micro And Small Enterprises Facilitation Council & ANR ‘Unregistered MSME will also be treated as ‘supplier’ u/s 2(n) of MSMED Act. 

So Company need to mention details of every MSME in their reporting whether Registered or not.

Therefore, one can opine that, Details of only registered MSME required filing with ROC in form MSME-1.

B. Whether for purpose of filing of e-form MSME-1 by specified Companies. Whether Micro or Small Companies required to obtain registration under MSME Act or not?-

As per language of MSME Act, 2006 Section 8 “Any person who intends to establish Micro, Small “shall” file …………………….. With authority.

Therefore, one can opine that an entity registered under MSME Act, 2006 by fulfilling the above mentioned limit shall considered as Micro and Small entity for purpose of MSME-1. Therefore, one can opine that, Details of only registered MSME required filing with ROC in form MSME-1.

C. If on 22.01.2019 (date of notification of rules) company doesn’t have any MSME register creditor. Whether Company need to file MSME-1 with NIL details.

As per language of Notification, if all the vendors/ creditors of Company are NON- MSME registered. In such case there is no need to file MSME-1.

Therefore, one can opine that, If company doesn’t not have any registered MSME Company there is no need to file MSME-1.

D. Whether there is any limit on amount of transaction with MSME?

As per MSME Act, 2006; Limit of amount doesn’t matter to check whether payment made in 45 days or not.

For an EG. If due amount is Rs. 100/- only and doesn’t made payment in 45 days. Specified Companies needs to report the same to ROC in e-form MSME-1.

E. If on 22.01.2019 (date of notification of rules) company having MSME register creditor / vendors. However, there is no due more than 45 days. Whether Company need to file MSME-1 with details of such Company?

As per language of Notification, Company having Creditors/ vendors which are registered in MSME. However, there is no default in payment of such vendor for more than 45 days. In such case there is no need to file MSME-1.

Therefore, one can opine that, requirement to file forms arise only in situation where there is default in payment more than 45 days.

F. What are the Consequences on Company if its fails to file e-form MSME-1 within 30 days of notification?

Statutory Provisions Contained Under the Act:

Section 450. If a company or any officer of a company or any other person contravenes any of the provisions of this Act or The Rules Made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.

Therefore, one can opine that if company fails to file MSME-1 within 30 days then Penalty shall be as follow:

Penalty on One Time Fine Continue penalty from 31st Day of non filing
Company Rs. 10,000/- Rs. 1,000/- Every Day
Officer in Default (KMP, Directors) Rs. 10,000/- Rs. 1,000/- Every Day

G. If a MSME-1 Company ownes money to other MSME Company and payment is due more than 45 days. Whether first Company needs to file MSME-1?

As per language of Notification, every company who has not makes payment of any due to MSME within 45 days. Such Company shall be fall in criteria of Specified Companies. Therefore, such Companies required filing e-form MSME-1.

H. If a Company registered under MSME but later on exceeded the limit provided for registration under MSME. Do specified companies need to report about such company in MSME-1?

As per language of MSME Act. Any company wants to register under MSME Act need to comply conditions / limits under MSME Act.

Therefore one can opine that, if any time Company crossed such Limit will be cease to considered as MSME. However, if a company ceased as MSME no need to get reported under MSME-1.

I. Which Companies need to do compliance of form MSME-1?

Every Company “Public or Private” if falls in below mentioned condition:

form MSME-1

J. Which type of entities cover under Micro and Small entities?-

Micro and small Includes:

  • Proprietorship, Hindu Undivided Family,           
  • Association of Persons, Co-Operative Society,
  • Partnership Firm, Company or Undertaking

K. How to identify whether creditors entity falls under Micro and Small or not?-

For the purpose of reporting under MSME Form-1. Company should be aware that creditor’s entity is Micro or Small or not.

Therefore,

1. Company have to ask a declaration from the creditors whether they falls under Micro or small or not and whether as on date they meet criteria of MSME.

2. Company has to ask for copy of certificate of registration under MSME.

L. In “One Time Return” which type of information required to submit with ROC?

One Time Return

M. Which Companies falls under MSME

The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified,vide S.O. 1642(E) dtd.29-09-2006 are as under

Manufacturing Sector

    Enterprises  Investment in plant & machinery
Micro Enterprises  Does not exceed twenty five lakh rupees
Small Enterprises More than twenty five lakh rupees but does not exceed five crore rupees
Medium Enterprises More than five crore rupees but does not exceed ten  crore rupees

Service Sector

    Enterprises  Investment in equipments
Micro Enterprises  Does not exceed ten lakh rupees:
Small Enterprises  More than  ten lakh rupees but does not exceed two crore rupees
Medium Enterprises  More than two crore rupees but does not exceed five core rupees

N. Meaning of Enterprises?

  • Manufacturing Enterprises-he enterprises 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) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.
  • Service Enterprises:-The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.

O. Whether Traders and Retailers can get registration under MSME?

As per our understanding of MSME Act, Only manufactures and service provides as mentioned above can get registration under MSME.

P. If there is an agreement between MSME registered company and other company for payment with in any days more than 45 days e.g 60 days or 75 days? Whether Specified Company need to file e-for MSME-1 after expiry of 45 days?

As per section 15 of MSME Act, “in no case period agreed between supplier and buyer in writing shall exceed 45 days from day of acceptance.

Therefore one can opine that, agreement between supplier and buyer for payment after 45 days doesn’t have any effect in filing of MSME-1. Because as per MSME Act, supplier and buyer cannot decide day more than 45 days.

Q. What are consequences for non filing of the MSME form?

As per section 16 of MSME Act, if buyer make delay in payment more than 45 days in such case buyer is liable to pay compound interest with monthly restes to the supplier on that amount from the appointed day, at three times of the bank rate notified by RBI.

Therefore one can opine that, consequences nonpayment within 45 days is buyer liable to make payment of interest.

R. What are consequences for non filing of the MSME form?

As per section 16 of MSME Act, if buyer make delay in payment more than 45 days in such case buyer is liable to pay compound interest with monthly restes to the supplier on that amount from the appointed day, at three times of the bank rate notified by RBI.

S. If supplier registered under SSI but not registered in MSME. Whether reporting in respect of SSI registered companies required?

Reporting in MSME-1 is required in respect of MSME registered Companies Only. SSI registered companies are not required to file MSME-1

T. Is there any online facility to check whether Companies’ is registered under MSME or not?

There is no online portal to check whether Company is registered under MSME or not. Buyer have to ask the same from supplier.

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

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6 Comments

  1. Arjun agrawal says:

    There is a query regarding initial return of msme -1, the amount outstanding on the date of notification i.e 22nd January is to be reported or the amount that was outstanding for more than 45 days before the date of notification is to be reported?

  2. Khadir Shaikh says:

    Very nice article.
    In my Opinion, revision required in answer of R and F.
    Because penalty mentioned in companies act for non filing. MSME act deal with delay Payment and interest.
    In my Opinion for Penalty provision Sec 405(4) will Apply.

  3. Husain Shopurwala says:

    As per Notification language nowhere it has mentioned registered MSME. i.e. it means any entity which falls under the definition of MSME whether registered or not will be treated as MSME for this notification.

    Moreover according to recent judgement under Ramky Infrastructure VS Micro and Small Facilitation Council, Delhi Court held that an entity which falls under defnition of MSME will be treated as supplier even the entity has not filed Memorandum as required under MSMED Act

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