PENALTY
FOR DELAY IN FILING OF
FORM MSME-1
SHORT
SUMMARY:
The
submission of MSME-1 is not only a requirement of the Companies Act, but it
also has implications on the Income Tax Act and affects the statutory auditor
of the company.
As
a statutory auditor, it is necessary to include a report in the financial
statement regarding the delay in payment to MSME vendors, as well as the
provisions of the loan.
Even
if a Company Secretary who is certifying the MGT-7 of a Company should mention
the failure to file or incorrect filing of MSME-1 in the MGT-7 as
non-compliance.
BACKGROUND:
As
per section 405(1) of the Companies Act, 2013 and as per para 3 of the
Specified Companies (Furnishing of Information about payment to Micro and Small
Enterprise Suppliers) Order, 2019, every company shall file a return as per
MSME Form I:
·
By 31st October
for the period from April to September and
·
By 30th April
for the period from October to March
Noncompliance
of Section 405(1) is liable with penalty u/s 405(4)
i.e. such company shall
be liable to a penalty of INR. 20,000 /- and every officer in default
shall be liable to a penalty of INR. 20,000 in case of continuing failure,
with further penalty of INR. 1,000/- for each day during which such failure
continues, subject to a maximum of INR. 300,000/-.
“ADJUDICATION
ORDER IN THE MATTER OF
SAMSUNG R&D
INSTITUTE-INDIA-BANGALORE PRIVATE LIMITED”
I.
FACTS OF THE
CASE:
a.
The company was
required to file MSME-1 for the period April 2022 to September 2022 by October
31, 2022, and October 2022 to March 2023 by April 30, 2023, with ROC.
b.
On July 25, 2023, the
company filed both durations MSME-1 by making a default of 266 days and 85 days
respectively.
c.
Non-compliances of
section 405 are calculated from November 01, 2022, to July 25, 2023 and May 01,
2023 to July 25, 2023 respectively for both delayed return filed.
II. ORDER:
Having
considered the facts and circumstances of the case, and after taking into
account the factors above, I hereby impose penalty as under
|
Default
|
Relevant
Duration
|
Period
of Default
|
Number
of days default
|
|
From
|
To
|
|
I
|
April
2022-September 2022
|
01.11.2022
|
25.07.2023
|
266
|
|
II
|
October
2022-March 2023
|
01.05.2023
|
25.07.2023
|
85
|
|
Name
of Person on which the penalty is imposed
|
Penalty
imposed for Default Instance-I
|
Penalty
imposed for Default Instance-II
|
Total
Penalty Imposed
|
|
Company
|
20,000+1,000*265=
2,85,000
|
20,000+1,000*84=
1,04,000
|
3,89,000
|
|
Yoong
Chang Kim-Director
|
20,000+1,000*265=
2,85,000
|
20,000+1,000*84=
1,04,000
|
3,89,000
|
|
Dipesh
Amritpal Shah, Director
|
20,000+1,000*265=
2,85,000
|
20,000+1,000*84=
1,04,000
|
3,89,000
|
CONCLUSION:
The
ROC Karnataka made a commendable decision to take action against companies who
deliberately fail to comply with Section 405 and do not take the requirements
of the Companies Act seriously. We, as professionals from all the ROCs in the
country, suggest that action be taken and notices of adjudication be issued
against companies that are not adhering to the compliance requirements of the
Companies Act.
Author – CS
Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from
Delhi and can be contacted at csdiveshgoyal@gmail.com).
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information existing at the time of the preparation. Although care has been
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