Delay in submission of MSME Form I: MCA imposes Rs. 11.67 Lakh Penalty

Order of Penalty under Section 454 of the Companies Act, 2013 read with rule 3 of Companies (Adjudication of Penalties) Rules, 2014 for non-compliance of section 405 of The Companies Act,2013 in the matter of Samsung R&D Institute India—Bangalore Private Limited.

Provisions Involved:

• Section 405 of the Companies Act, 2013, states that MCA 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 shall submit a half yearly return to the Ministry of Corporate Affairs in form MSME-1and if any company fails to furnishes any information or statistics which is incorrect or incomplete in any material respect, the company and every officer of the company who is in default shall be liable for a penalty.

Facts of the Case –

• The Samsung R&D Institute India—Bangalore Private Limited has filed a Suo-motu adjudication
  application stating that that company did not provide the complete disclosures of specific transactions in Form MSME I for the duration April 2022 to September 2022 and October 2022 to March 2023 within the prescribed time limit which was unintentional and was an oversight resulting from an internal clerical error.
• Whereas as per section 405 of The Companies Act, 2013, Samsung R&D admitted to not providing
  complete disclosures in Form MSME I for specific transactions during April 2022 to September 2022 and October 2022 to March 2023 within the prescribed time limit.

Impact of Violation –

• On account of above violation, notice were issued with monetary penalties under Sections 454 of The Companies Act, 2013 as per the details mentioned below:

1. Default Instance I (266 days): Rs. 2,85,000 Each on the company and its 2 directors.
2. Default Instance II (85 days): Rs. 1,04,000 Each on the company and its 2 directors
3. Total Penalty amounted to Rs. 11,67,000.

SW Point of View

The penalties imposed by MCA serve as a reminder of the importance of timely compliance with statutory obligations. Companies need to adhere to prescribed timelines to avoid legal consequences. The order underscores the regulatory framework’s commitment to enforcing accountability and transparency within the corporate sector.

Ashutosh Sharma, Audit Associate, SW India