Your client is a trader holding Udyam registration as a micro enterprise. Does that registration carry any benefit beyond priority sector lending?
On the Kerala High Court's reading, no. Wholesale and retail trade was excluded from the MSMED Act in 2017, re-included by the Office Memorandum of 2 July 2021, and that re-inclusion was for the limited purpose of priority sector lending only. The Court refused a trader the micro-enterprise exemption in a Quality Control Order because, registration notwithstanding, nothing beyond priority sector lending could be claimed.
Decided by the High Court (Ziyad Rahman A.A. J) on 2025-06-10, reported as WP(C) No. 18501 of 2025. It bears on section MSMED s.2(n), section MSMED s.15, section 43B(h) of the Income Tax Act 1961, in How Tax Law Is Read matters.
This is the only judicial statement so far that reads the 2021 Office Memoranda as a hard ceiling on what a trader's Udyam registration is worth. Anyone arguing that s.43B(h) does not reach purchases from a registered trader reaches for it. The Allahabad High Court has read the same instruments the other way, so the point is contested and must be pleaded as contested.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner was a plywood trader and importer holding Udyam registration certificate UDYAM-KL-02-0113634 dated 22 February 2025 as a micro enterprise (para 1, Ext.P1). It imported Indonesian keruing matt plywood under an invoice dated 14 March 2025 (para 2). The Plywood and Wooden Flush Door Shutters (Quality Control) Order, 2024 dated 15 March 2024 (Ext.P2) came into force on 28 February 2025, with provisos to Order 1(2) postponing the date of implementation for small and micro enterprises. The petitioner claimed the extended period under those provisos (para 7). The customs respondents opposed the claim (para 3) and relied on three Ministry of MSME instruments: the Official Memorandum F. No. UAM/MC/01/2017-SME dated 27 June 2017 excluding trading activity, Office Memorandum No. 5/2(2)/2021-E/P&G/Policy dated 2 July 2021 re-including retail and wholesale trade, and Office Memorandum No. 1/4(1)/2021-P&G/Policy dated 1 September 2021.
The writ petition was dismissed. The petitioner being engaged in wholesale and retail trade, its category had been excluded from the benefits of the MSMED Act by the 2017 memorandum and was later re-included for the limited purpose of availing priority sector lending only; the 1 September 2021 memorandum reiterated that limited purpose and excluded the benefit of delayed payments under the MSMED Act (para 8). Since the inclusion was confined to priority lending, nothing beyond that could be claimed by a micro enterprise in the wholesale or retail trade category (para 9). The petitioner's status as a micro enterprise, registration notwithstanding, was 'only for the purpose of availing priority sector lending alone and nothing beyond that', so the extension of time under the proviso could not be availed (para 10). The dismissal was without prejudice to any other right to approach the appropriate forum.
The Court treated the sequence of memoranda as decisive. Trading was first taken outside the registration scheme altogether, then brought back in on terms; the terms being expressed as a limited purpose, the Court held that the limit governs the whole of what registration yields (paras 8 and 9). Counsel's argument that an exemption from a Quality Control Order is not a 'benefit' of the kind the 2 July 2021 memorandum addresses was rejected on the footing that the anterior question is the scope of the re-inclusion itself, not the label attached to the particular relief claimed (para 9). The Court added a construction point: the provisos to Order 1(2) of the Quality Control Order are exemptions and must be strictly construed, which reinforced the refusal (para 10).
Such re-inclusion was for a limited purpose of availing priority sector lending.
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Handle my notice → Ask a CA on WhatsAppOn the Kerala High Court's reading, no. Wholesale and retail trade was excluded from the MSMED Act in 2017, re-included by the Office Memorandum of 2 July 2021, and that re-inclusion was for the limited purpose of priority sector lending only. The Court refused a trader the micro-enterprise exemption in a Quality Control Order because, registration notwithstanding, nothing beyond priority sector lending could be claimed. This was decided by the High Court (Ziyad Rahman A.A. J) and bears on section MSMED s.2(n), section MSMED s.15, section 43B(h) of the Income Tax Act 1961. It is reported as WP(C) No. 18501 of 2025. This is the only judicial statement so far that reads the 2021 Office Memoranda as a hard ceiling on what a trader's Udyam registration is worth. Anyone arguing that s.43B(h) does not reach purchases from a registered trader reaches for it. The Allahabad High Court has read the same instruments the other way, so the point is contested and must be pleaded as contested. If it applies to you, the first step is this: Read the judgment for what it is: a Quality Control Order exemption case under a writ petition against customs authorities, not a delayed-payment or income-tax case.
The petitioner was a plywood trader and importer holding Udyam registration certificate UDYAM-KL-02-0113634 dated 22 February 2025 as a micro enterprise (para 1, Ext.P1). It imported Indonesian keruing matt plywood under an invoice dated 14 March 2025 (para 2). The Plywood and Wooden Flush Door Shutters (Quality Control) Order, 2024 dated 15 March 2024 (Ext.P2) came into force on 28 February 2025, with provisos to Order 1(2) postponing the date of implementation for small and micro enterprises. The petitioner claimed the extended period under those provisos (para 7). The customs respondents opposed the claim (para 3) and relied on three Ministry of MSME instruments: the Official Memorandum F. No. UAM/MC/01/2017-SME dated 27 June 2017 excluding trading activity, Office Memorandum No. 5/2(2)/2021-E/P&G/Policy dated 2 July 2021 re-including retail and wholesale trade, and Office Memorandum No. 1/4(1)/2021-P&G/Policy dated 1 September 2021. The matter was decided on 2025-06-10 by the High Court (Ziyad Rahman A.A. J). On those facts the High Court held as follows. The writ petition was dismissed. The petitioner being engaged in wholesale and retail trade, its category had been excluded from the benefits of the MSMED Act by the 2017 memorandum and was later re-included for the limited purpose of availing priority sector lending only; the 1 September 2021 memorandum reiterated that limited purpose and excluded the benefit of delayed payments under the MSMED Act (para 8). Since the inclusion was confined to priority lending, nothing beyond that could be claimed by a micro enterprise in the wholesale or retail trade category (para 9). The petitioner's status as a micro enterprise, registration notwithstanding, was 'only for the purpose of availing priority sector lending alone and nothing beyond that', so the extension of time under the proviso could not be availed (para 10). The dismissal was without prejudice to any other right to approach the appropriate forum.
The Court treated the sequence of memoranda as decisive. Trading was first taken outside the registration scheme altogether, then brought back in on terms; the terms being expressed as a limited purpose, the Court held that the limit governs the whole of what registration yields (paras 8 and 9). Counsel's argument that an exemption from a Quality Control Order is not a 'benefit' of the kind the 2 July 2021 memorandum addresses was rejected on the footing that the anterior question is the scope of the re-inclusion itself, not the label attached to the particular relief claimed (para 9). The Court added a construction point: the provisos to Order 1(2) of the Quality Control Order are exemptions and must be strictly construed, which reinforced the refusal (para 10). In the words reproduced by the source cited on this page: "Such re-inclusion was for a limited purpose of availing priority sector lending."
It was decided by the High Court on 2025-06-10 and is reported as WP(C) No. 18501 of 2025. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section MSMED s.2(n), section MSMED s.15, section 43B(h), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The writ petition was dismissed. The petitioner being engaged in wholesale and retail trade, its category had been excluded from the benefits of the MSMED Act by the 2017 memorandum and was later re-included for the limited purpose of availing priority sector lending only; the 1 September 2021 memorandum reiterated that limited purpose and excluded the benefit of delayed payments under the MSMED Act (para 8). Since the inclusion was confined to priority lending, nothing beyond that could be claimed by a micro enterprise in the wholesale or retail trade category (para 9). The petitioner's status as a micro enterprise, registration notwithstanding, was 'only for the purpose of availing priority sector lending alone and nothing beyond that', so the extension of time under the proviso could not be availed (para 10). The dismissal was without prejudice to any other right to approach the appropriate forum. It arises in How Tax Law Is Read matters, on section MSMED s.2(n), section MSMED s.15, section 43B(h) of the Income Tax Act 1961, and was decided by Ziyad Rahman A.A. J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If you rely on it for s.43B(h), say so expressly - the reasoning at paras 8 to 10 is about the reach of a trader's registration generally, and is transferable, but the ratio was not delivered on s.15 or on s.43B(h). Put the Office Memorandum of 2 July 2021 and the Office Memorandum of 1 September 2021 on record; the Court decided on the documents, not on the department's description of them. Cite Dhruv Anand v State of U.P. alongside it and deal with the divergence in your own submission rather than leaving the department to find it.
High Courts differ on this point. The Allahabad High Court in Dhruv Anand v State of U.P., decided 19 November 2025, read the Office Memorandum of 1 September 2021 as being 'specifically in respect of lending not for any other purpose' and held it 'not at all applicable' to a delayed-payment claim for goods, allowing the supplier the remedy under ss.15, 17 and 18. No decision applying or affirming the Kerala view was located, and no decision overruling it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The case is not what it is often described as. It is a writ petition against customs authorities about the date from which a Quality Control Order applies, not a delayed-payment claim and not an income-tax matter; s.43B(h) is not mentioned in the judgment. What makes it useful is the Court's construction of the 2021 memoranda at paras 8 to 10, which is stated generally. Para 8 records the Court's own reading that the 1 September 2021 memorandum excluded the benefit of delayed payments under the MSMED Act - that is the Court describing the instrument, and the instrument itself should be read. The Office Memorandum of 1 September 2021 could not be retrieved from dcmsme.gov.in in this pass; the 2 July 2021 memorandum was retrieved and its operative words are 'benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only'. The judgment refers to the exhibits inconsistently as Ext.R1(b)/(c)/(d) and Ext.R2(b)/(c); the descriptions in the exhibit list are what have been used here. The library already carries the two memoranda as a statutory-position entry at msme-office-memorandum-2021-traders-43bh; this entry is the judicial treatment, not a second copy of the instruments. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was dismissed. The petitioner being engaged in wholesale and retail trade, its category had been excluded from the benefits of the MSMED Act by the 2017 memorandum and was later re-included for the limited purpose of availing priority sector lending only; the 1 September 2021 memorandum reiterated that limited purpose and excluded the benefit of delayed payments under the MSMED Act (para 8). Since the inclusion was confined to priority lending, nothing beyond that could be claimed by a micro enterprise in the wholesale or retail trade category (para 9). The petitioner's status as a micro enterprise, registration notwithstanding, was 'only for the purpose of availing priority sector lending alone and nothing beyond that', so the extension of time under the proviso could not be availed (para 10). The dismissal was without prejudice to any other right to approach the appropriate forum.
TaxSphere, “Luxe Panel Distributors v Additional Commissioner of Customs”, https://taxnotice.vittsphere.com/caselaw/case/luxe-panel-distributors-v-addl-cmr-customs-trader-msme-priority-sector-lending/ (validity last checked 2026-09-17)
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The buyer says the 1 September 2021 Office Memorandum takes your trader-supplier outside the delayed-payment machinery. Is that right?
Your supplier registered on Udyam after the goods were supplied. Does the MSMED Act still apply to those supplies?
You are told the Supreme Court has settled that a supplier must be registered before the contract. Is that safe to rely on?
The supplier registered under the MSMED Act part-way through the relationship. Which supplies does the Act protect?
