Half yearly ROC reporting by companies in India

Half yearly ROC reporting by companies in India

The Ministry of Corporate Affairs (MCA) has notified THE SPECIFIED COMPANIES (FURNISHING OF INFORMATION ABOUT PAYMENT TO MICRO AND SMALL ENTERPRISE SUPPLIERS) ORDER, 2019 that every company who gets supplies of goods and services from Micro And small enterprises and whose payments to Micro and small suppliers exceeds 45 days from the date of acceptance shall have to file MSME form. 

Due date to file is 21 February 2019.

One of the best section of the Companies Act, 2013 (“the act”), is section 405 i.e. Power of Central Government to Direct Companies to Furnish Information or Statistics.

This section confers the powers to Central Government (“CG”) where the CG may, by order, require companies generally, or any class of companies, or any company, to furnish such information or statistics with regard to their or its constitution or working, and within such time, as may be specified in the order and every order under shall be published in the Official Gazette and may be addressed to companies generally or to any class of companies, in such manner, as the CG may think fit and the date of such publication shall be deemed to be the date on which requirement for information or statistics is made on such companies or class of companies, as the case may be.

The CG vide notification number S.O. 5622(E), dated the 2^nd November, 2018 has directed that all companies, who get their supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services (hereafter referred to as “Specified Companies”), shall submit a half yearly return to the MCA stating the following:

a)      the amount of payment due; and

b)      the reasons of the delay;

This is surely good news for MSMEs and Central Government for better control makes the following Order

The Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 on 22nd January, 2019

Q1 Which Form to be filled?

A1 MSME Form I (the form is yet to be notified at MCA website)

MCA has issued a General Circular w.r.t Extension for last date of filing initial return in MSME Form I. It has been clarified that pending the deployment of MSME Form I on MCA 21 portal and in order to avoid inconvenience to stakeholders on account of various factors, it is stated the period of thirty days for filing initial return in MSME Form 1 as specified in Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 shall be reckoned from the date the said e-form is deployed on MCA 21 portal.

Q2 Who to file above form?

A2 All Companies who get their supplies of goods or services from Micro and Small enterprises and whose payments to Micro and small enterprises suppliers exceed 45 days from the date of acceptance or date of deemed acceptance.

Q3 What details to be furnished?

A3 All outstanding dues to Micro or small enterprises suppliers existing on the date of notification of this order within 30 days from the date of publication of this notification i.e. by 21 February 2019.

Q4 Time limit for filing form MSME Form 1

A4 Every specified company shall file a return as per MSME Form I, by

For the Period half yearly	Last Date to file MSME form
April to September	31st October
October to March	30th April

** Please note that for reporting the previous outstanding payments the last date is 21-02-2019 and post that there will be half yearly reporting

Q4 What if company makes default in complying with the provisions?

A4 If any company fails to comply with this order or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect,

FINE
Company	Rs. 25,000/-
Every Officer	Rs. 25,000/- to Rs. 3,00,000/-
IMPRISONMENT
Every Officer	6 months /fine/or both

This move by the CG will definitely save the interest of the small sector.

Q5 How to know our supplier is micro and small. He needs to be registered??

A5 MSME stands for micro, small and medium enterprises and any enterprise that falls under any of these three categories. MSME enterprises are the backbone of any economy and are an engine of economic growth, promoting equitable development for all. Therefore, to support and promote MSMEs, the Government of India through various subsidies, schemes and incentives promote MSMEs through the MSMED Act. To avail the benefits under the MSMED Act from Central or State Government and the Banking Sector, MSME Registration is required.

Micro, Small and Medium sized enterprises in both the manufacturing and service sector can obtain MSME Registration under the MSMED Act. Though the MSME registration is not statutory, it is beneficial for business at it provides a range of benefits such as eligibility for lower rates of interest, excise exemption scheme, tax subsidies, power tariff subsidies, capital investment subsidies and other support. We can help your business obtain MSME Registration to avail a host of benefits.

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

1. 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.

2. Service Enterprises:-The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.

For Enterprises engaged in the MANUFACTURE OR PRODUCTION, PROCESSING OR PRESERVATION OF GOODS, the definition is as follows:

·         Micro Enterprise: An enterprise where investment in plant and machinery does not exceed Rs. 25 lakh.

·         Small Enterprise: An enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.

·         Medium Enterprise:  An enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

In case of the above enterprises, investment in plant and machinery is the original cost excluding land and building and other items as specified by the Ministry of Small Scale Industries.

For Enterprises engaged in providing or rendering of services, the definition is as follows:

·         Micro Enterprise: An enterprise where the investment in equipment does not exceed Rs. 10 lakh.

·         Small Enterprise: An enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore.

·         Medium Enterprise: An enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.
   
      Case Reference - MSME
 
      As per the below Delhi High Court judgement even an unregistered MSME is also treated same as MSME, gist is as below:

      There has been ambiguity since long regarding the applicability of the MSMED Act, 2006 in cases where the entities were not registered under the MSMED Act at the time of execution of the contract.   A Judgement was passed by Justice Vibhu Bakhru of the Delhi High Court on April 7, 2018, in the matter of M/S Ramky Infrastructure Private Limited vs. Micro and Small Facilitation Council & Anr. W.P.(C) 5004/2017, wherein it has been held that an entity which falls within the definition of the micro/small enterprise will be treated as a ‘supplier’ under Section 2(n) of the MSMED Act even if it has not filed a Memorandum as required under Section 8(1) of the MSMED Act.