Author: By Harsha Sharma
The Ministry of Corporate Affairs (MCA) has laid down specific MSME Return guidelines that companies must follow to ensure transparency and timely payments to MSMEs..
Form MSME-1 is a half yearly return that is required to be filed with Registrar of Companies in respect of outstanding payments to Micro, Small or Medium Enterprises (MSMEs). This obligation is in accordance with Order 2 and 3 dated January 22, 2019, issued under section 405 of the Companies Act, 2013 (Act). As a half yearly return, Form MSME-1 must be submitted by October 31st for the April to September period and by April 30th for the October to March period. Filing this form serves to protect the interest of MSMEs by ensuring that their receivables are accurately documented. It facilitates the identification of delayed payments and enables timely resolution.
All companies receiving goods or services from MSME are obligated to submit this return if payments to these suppliers extend beyond forty-five days from the date of acceptance (or deemed acceptance) of the relevant goods or services. In addition to disclosing the amount of outstanding payments, companies are also mandated to provide reasons for any delays in payment.
There is no additional fees prescribed by Registrar of Companies for late filing of MSME-1. However, non filing and delayed filing will attract penalty under Section 405(4) of the Companies Act, 2013. As per Section 405(4), if any company fails to file MSME-1, the company and every officer in default will be liable to a penalty of Rs.20,000. In case of continuing failure, the company and every officer in default will be liable for a further penalty of Rs.1,000 for each day the failure continues, subject to a maximum of Rs.3 lakh.
In a recently decided case, ROC has levied hefty penalty on the Company and Managing Director for non submission of MSME-1 within the due date.
Companies are time and again urged to adhere to the statutory guidelines and follow the compliances in true spirit to avoid penalties and legal consequences.
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