Benefits To Registered Retail Traders Under MSMED Act Limited To Priority Sector Lending, Not Eligible For QCO Exemption: Kerala High Court
The Kerala Excessive Court docket held that the advantages to registered retail merchants underneath MSMED Act, 2006 (Micro, Small and Medium Enterprises Growth Act, 2006) restricted to precedence sector lending solely, and usually are not eligible for QCO [Plywood and Wooden flush door shutters (Quality Control) Order, 2024] exemption.
Justice Ziyad Rahman A.A. acknowledged that “all the class of wholesale and retail trades have been excluded utterly from the purview of MSMED Act and later, they have been re-included inside the purview of the Act. Such re-inclusion was for a restricted objective of availing precedence sector lending. Subsequently, since such inclusion was for a restricted objective, which is confined to the precedence lending solely, nothing past such advantages could be claimed by the Micro Enterprises, coming inside the class of wholesale and retail commerce.”
The assessee/petitioner is a dealer of plywood and can be an importer. The assessee has secured registration with the Ministry of Micro, Small and Medium Enterprises, Authorities of India as a Micro Enterprise, as outlined underneath the Micro, Small and Medium Enterprises Growth Act, 2006.
The Ministry of Commerce and Trade, (Division for Promotion of Trade and Inside Commerce), had issued Plywood and Wood flush door shutters (High quality Management) Order, 2024 (Ext.P2).
As per the stated High quality Management Order (“QCO”) sure requirements have been prescribed for the merchandise of Plywood and Wood flush doorways shutters. As per Order 1 (2) of the QCO, 2024, the identical shall come into drive with impact from 28.02.2025.
In accordance to the division, because the standing of the assessee as a micro enterprise, being a retail dealer, is proscribed to the advantage of availing the precedence sector lending alone, the exemption as contemplated underneath the second proviso to Order 1(2) of Ext.P2 can’t be granted to the assessee.
The particular competition raised by the assessee is by putting reliance upon the prolonged interval, as per the proviso to Order 1(2) of Ext.P2 QCO. It was pointed out that, as per the stated proviso, the Micro Enterprises are excluded from the software of the standard measures contemplated underneath Ext.P2, until 20.08.2025. Subsequently, the assessee, being a Micro Enterprise is entitled to the aforesaid advantages.
The bench acknowledged that the contentions raised by the assessee, claiming advantages of exemption, so far as Micro enterprises are involved, can’t be prolonged to them. That is extra notably as a result of, it’s evident from the Order 1 (2) of Ext.P2 that, the identical got here into drive of 28.02.2025 and particular exclusion was granted to Small Enterprises and Micro Enterprises as per the provisos to the stated provision.
“Since the aforesaid provisos are meant for exemptions, the identical need to be strictly construed and the standing of the assessee as a micro enterprise, regardless that it is having a registration, it is just for the aim of availing precedence sector lending alone and nothing past that. Subsequently, the extension of time as contemplated underneath the proviso referred to above can’t be availed by the assessee being non-eligible”, added the bench.
In view of the above, the bench dismissed the petition.
Case Title: M/s Luxe Panel Distributors v. The Extra Commissioner of Customs
Case Quantity: WP(C) NO. 18501 OF 2025
Counsel for Petitioner/ Assessee: M. Balagopal
Counsel for Respondent/ Division: Vivek A.V.