The Ministry of Corporate Affairs Form MSME

The Ministry of Corporate Affairs (MCA), on the 22nd of January 2019, notified a requirement companies that have outstanding to MSME enterprises to file the particulars of all current outstanding dues to the concerned Micro and Small Enterprises in Form MSME 1. The filing of such returns comprises of two parts, namely initial returns (MSME-1) and half-yearly return (MSME-2). MSME-1 must be filed within 30 days of the issue of the notification, which to be precise was the 21st of February, 2019 (this date has now been extended as has been specified in this article). This due date was then extended and now the present due date is within 30 days of the form being made available by the MCA. In this article, we look at Form MSME 1 in detail. 

Specified Enterprises

Specified Companies are required to file Form MSME. Specified companies in this context, denotes all companies getting goods or services from micro and small enterprises. Specifically, it is meant for those companies whose payments to the latter hasn’t been made for more than forty-five days from the date of acceptance of the goods or services. As per the notification, these companies are required to furnish a half-yearly return to the Ministry of Corporate Affairs stating the particulars of the outstanding amount and the reasons for delay in payment to MSME enterprises. The notification pertaining to this provision is reproduced below:

Government of India

Ministry of Corporate Affairs

Notification

22 January, 2019

S.O. 368(E).-Whereas, the Central Government vide notification number S.O.5622 (E), dated the 2nd November, 2018 has directed that all companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) (hereafter referred to as “Specified Companies”), shall submit a 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;

And whereas, in exercise of power under section 405 of the Companies Act, 2013,(18 of 2013} the Central Government, considers it necessary to require “Specified Companies” to furnish above information under said section of the Act.

Now, therefore, in exercise of the powers conferred by section 405 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order, namely:-

1. Short title and commencement.- (1) This Order may be called the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019.

(2) It shall come into force from the date of its publication in the Official Gazette.

2. Every specified company shall file in MSME Form I details of all outstanding dues to Micro or small enterprises suppliers existing on the date of notification of this order within thirty days from the date of publication of this notification.

3. Every specified company shall file a return as per MSME Form I annexed to this Order, by 31st October for the period from April to September and by 30th April for the period from October to March.

Micro and Small Classification

Micro and small enterprises refer to any class or classes of enterprises, whether proprietorship, Hindu Undivided Family (HUF), Association of Persons (AOP), co-operative society, partnership firm, company or undertaking or any other name assigned to it. If such entities are in pursuit of the manufacture or production of goods, it must satisfy the following conditions:

1. Micro enterprises – manufacturing enterprises, to be classified as micro, must have made an investment of Rs. 25 lakhs or lower. On the other hand, entities of the service sector must have invested a sum of Rs. 10 lakhs or lower in equipment to receive this classification.
2. Small enterprises –manufacturing enterprises would be classified as small for this purpose if its investment in Plant and Machinery exceeds Rs. 25 lakhs but is limited to Rs. 5 crores. On the other hand, enterprises in the service sector would be classified as small if their investment in equipment exceeds Rs. 10 lakhs but is limited to Rs. 2 crores.