MSME-I Form Compliance of MCA

   The Ministry of Micro, Small and Medium Enterprises (MSME) issued a notice on 2^nd of November, 2018 in support of the micro, small and medium enterprises. These companies are involved in supplying both goods and services to large enterprises. However, most of the times, the major issue faced by these small enterprises is the delay in payment by the large companies. The current notice is given to such companies who have not paid the payment of the seller for more than 45 days.

 

The various companies falling under MSME are based on the amount invested in plant and machinery or equipment for the manufacturing or service enterprises. The following companies are called MSME :

Manufacturing Sector :

• Micro enterprises whose investment does not exceed Rs. 25 lakhs
• Small enterprises whose investment is within the range Rs. 25 lakhs and Rs. 5 crores
• Medium enterprises whose investment is more than Rs. 5 crores but less than Rs. 10 crores.

Service Sector :

• Micro enterprises whose investment does not exceed Rs. 10 lakhs
• Small enterprises whose investment is more than Rs. 10 lakhs but less than Rs. 2 crores
• Medium enterprises whose investment is more than Rs. 2 crores and does not exceed Rs. 5 crores.

 

These micro and small enterprise entities include the proprietorship, Hindu Undivided Family, partnership firm, company, undertaking, and co-operative society.

 

The notice issued in November stated that all those companies who get goods and services from the above mentioned micro and small enterprises and whose payments to these enterprises has been pending for 45 days from the date of acceptance or the date of deemed acceptance of goods and services have to submit half yearly return to the MCA. Deemed acceptance means that the buyer has not in written form complained about the goods and services received by him from the seller.

In view of this, MCA released a new form called MSME-I. The return will include the payment due and the reasons for the delay.

 

Those companies who do not have any outstanding dues to the micro or small enterprises, those who have outstanding dues to these enterprises for less than 45 days, and those companies who have outstanding dues to medium enterprises do not need to fill the MSME-I form.

 

The form asks for details to be filled in including the amount of payment due, reasons for the delay, PAN number of the company along with details of the supplier – name, PAN, amount due, date from which amount is due, etc.

 

From the day the notice was published in Official Gazette of India, the first filing of the form should be done within 30 days, i.e., on or before 20^th February, 2019.

For further filing of the form for the months from April to September, 31^st October is the due date while for the next period of months from October to March, the form needs to be filled in on or before 30^th April.

 

There may be cases wherein the micro or small enterprise has a mutual agreement with the buyer about the payment period on acceptance of the goods and services which may be more than 45 days. Section 15 of the MSME Act says that, ‘in no case period agreed between supplier and buyer in writing shall exceed 45 days from day of acceptance. Thus, it is quite clear that in such cases, the agreement of making payment for after 45 days does not hold any meaning. The two parties cannot decide the payment period for more than 45 days.

 

If in case, the buyer fails to fill the MSME-I form within a period of 30 days of notification, the various statutory provisions of the Act come into force. According to section 405 of the Act, the central government has the power to direct companies to furnish information or statistics. The central government may ask such companies to provide information or statistics regarding their constitution or working in the time period mentioned in the order. If even after making such order, any company fails to provide that information or provides incorrect information that will be considered a punishable offence where the company will have to pay a fine upto Rs. 25,000 and along with this, every officer of the company in default will be punishable with imprisonment for a term upto 6 months or a fine of minimum Rs. 25,000 which may extend to Rs. 3 lakhs or with both.

 

The notice has not mentioned whether the companies falling under the MSME category but not registered under the MSME Act has to fill the details of such MSME in the form or not. However, the author of this article has comprehended that only the registered MSME require filing with ROC in the form.

 

The notice no doubt will be highly helpful to the micro and small scale enterprises which cannot survive under financial crunch for a longer duration of time. Getting paid on goods and services supplies in less period of time will help them to sustain and grow in the competitive market. This strict action taken by the government will act as a ruling scale for the willful defaulters and also the neglecting companies. Despite being the largest employment generating source in India, these MSME were struggling over the financing issues from their buyers from a long period of time. The new rule will not only help them to manage and run their business smoothly but also to open new gateways to enter into new business avenues.