Introduction

Government of India has made various reforms in Micro, Small and Medium Enterprises Development Act, 2006, (MSME) in order to promote and develop the business and market conditions for MSME’s. Pursuant to the provision of Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), Ministry of Corporate Affairs had came up with a big change in the Companies Act, 2013, wherein it has mandated all the Companies, who have outstanding dues to MSME as on 22.01.2019 shall submit half yearly return. This return is to be filed by Companies (hereafter referred to as “Specified Companies”) who fulfils the following criteria: – are in receipt of supplies of goods or services from micro and small enterprises and, – whose payments are outstanding to micro and small enterprise suppliers exceeds forty five days from the date of acceptance or the date of deemed acceptance of the goods or services , shall submit half yearly return to the Ministry of Corporate Affairs stating the following: (a) the amount of payment due; and (b) the reasons of the delay;

The due dates for the filling of return is: i) within 30 days from the date of notification; ii) 31 st October in case the period is from April-September iii) 30 th April in case the period is from October to arch The above hard step taken by the MCA, was the requirement of the time to provide a shield to MSMEs. There are so many MSME’s wherein huge amount of payment remains outstanding from the corporate and due to which it creates hurdle in their survival in the market and hampers their growth. Let’s discuss more about this notification in detail.

Definition of MSME’s:

Pursuant to Section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006),the Enterprises engaged in the business of manufacture or production, processing or preservation of goods as specified below shall be classified as :

 

Enterprises	Investment in Plant and Machinery*
Micro Enterprises	Does Not Exceed 25 Lakh Rupees
Small Enterprises	More Than 25 Lakh But Does Not Exceed 5 Crore Rupees
Medium Enterprises	More Than 5 Crore Rupees But Does Not Exceed 10 Crore Rupees

*Here, investment in plant and machinery is the original cost excluding land and building and the items specified by the Ministry of Small Scale Industries videits notification No.S.O.1722(E) dated October 5, 2006 .

 

Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below shall be classified as :

 

Enterprises	Investment in Equipments
Micro Enterprises	Does Not Exceed 10 Lakh Rupees
Small Enterprises	More Than 10 Lakh Rupees But Does Not Exceed 5 Crore Rupees
Medium Enterprises	More Than 2 Crore Rupees But Does Not Excceed 5 Crore Rupees

 

Applicability

The definition of MSME include Medium, Small and Micro enterprises. However the notification is applicable to :

1. Companies to whom goods or services are supplied by Micro and Small Enterprises only and
2. whose payments to such Micro and Small enterprise suppliers is outstanding for more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services.

Exemption

Above said provision is not applicable in case good or services are supplied by the Medium Enterprise to the Companies.

Reporting to be done to ROC:

One time reporting

Every company as mentioned above, having dues outstanding to micro and small enterprises, are required to file e-Form MSME Form 1 with ROC within a period of 30 days from the date of this MCA notification dated 22.01.2019 providing details of alloutstanding dues. Half yearly reporting, Every company as defined above are also required to file half yearly return in e-from MSME Form 1 as:

• From April to September -Due date of filing 31st October
• From October to March -Due date of filing 30th April

Consequences of non filing of Form MSME 1

According to the provision of section 405(4) of the Companies Act, 2013 and the rules made there under: In case companies fails to file timely return with ROC, then it shall be punishable with a fine which may extend upto Rs. 25000 and every officer in default shall be punishable with a fine which shall be not less than Rs. 25000 and extend upto Rs. 300000 per person or imprisonment for a term which may extend upto 6 months or both.

FAQ’s

1. Whether the Companies dealing with Micro and Small enterprises having no dues required to file Form MSME-I? Ans- No, return in Form MSME-I is to be filed only when the dues are outstanding to Small and Micro enterprises.
2. Whether there is any limit on amount of transaction with msme? Ans -There is no transaction limit. Even outstanding due on 22.01.2019 is of Rs. 10/- also needs to be reported to the Government.
3. Who are eligible to get MSME Registration? Ans -Only Manufacturers and Service Providers are eligible to get registered as MSME.
4. 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-form msme-1 after expiry of 45 days? Ans -Pursuant to Section 15 of MSME Act, the buyer shall make payment to MSME’s within 45 days only. Further, Form MSME-I, also says delay beyond 45 days shall be reported with reason for delay. Therefore, no written agreement can override the payment provision of the Act as well as the reporting provision of the notification related to delay beyond 45 days.
5. In “one time return” which type of information required to submit with roc? Ans –
   1. Total outstanding amount due as on 22nd jan,2019.
   2. Particular of name of supplier
   3. Pan of supplier
   4. amount of payment due,
   5. date from which the amount is due
6. 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? Ans -Irrespective of nature, every company, whether or not classified as MSME and incorporated under the Companies Act is required to file Form MSME-I only when there are dues outstanding to MSME.