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April 28, 2022

CA Association wrote to FM for poor MCA infrastructure for LLP compliance

by CA Shivam Jaiswal in Income Tax

CA Association wrote to FM for poor MCA infrastructure for LLP compliance

Chartered Accountants Association, Surat

Respected Madam,

With respect to the aforementioned subject, kindly be appraised that the present state of affairs of the IT Infrastructure deployed and offered to the public by the Ministry of Corporate Affairs, falling under your direct supervision have deteriorated to the extent of absolutely “no service”.

Just like the new Income Tax E-Filing Portal, the new exclusive Portal (“MCA V3 LLP Portal”) for filing of LLP (Limited Liability Partnership) forms which aimed high at easing out the various filings, has failed to deliver on time. Kindly understand the following chronology for the same:

 EventsPeriod
LLP (Amendment) Rules, 2022On 11-02-2022
Announcement for deployment of new LLP PortalOn 06-02-2022
LLP (Second Amendment) Rules, 2022On 04-03-2022
Scheduled Down-Timebetween 25-02-2022 to
05-03-2022
False Tweet by MCA that all LLP V3 filings are picking upOn 13-03-2022
Filings not possible evenOn 28-04-2022

As can be seen from the above table, that despite a prior announcement for deploying a new portal, neither the timeline for deployment was honoured nor the key functionalities were taken care of. Even after passing of more than 2 months, the cardinal functions are not available to all the stakeholders. MCA has washed its hands off by tweeting that the various filings are picking up, but the said statement is absolutely false, since such statement can be passed by the Ministry only and only when the benefit of such functionalities is available to all after due testing, and not by few, who opt to become volunteers as unpaid beta testers.

It is pertinent to note that Portal for Companies have huge number of forms and its templates which take time for development and deployment. However, the new MCA LLP V3 Portal needs to cater to 17 odd forms. The task designing those forms is never a rocket science, yet it is presented as so, to the stakeholders to hold them hostage to artificial crisis, which later the Officials will resolve and earn brownie points. It is of utmost relevance to note that, when in this era of technology driven laws, the tech governs the laws more than the legislators do. One must note that these very portals are an extension of administrative arm of the Government. When a Government Official is not spared for his negligence, how can an artificial entity and persons who run it, be spared for creating substantial hardships? The new portal launched in case of LLP (and earlier Income Tax) have promised a lot on paper, but failed to deliver when put into action. The most basic functionalities are not provided and stakeholders are on their own to devote substantial time without any fruitful results. At this juncture, the question by Hon’ble PM is more relevant, that why the professionals burn midnight oil, but it is only due to such unfruitful portals and processes imposed under the law.

It is also to bring to your kind notice, that the tech companies whom your Ministry has entrusted work have repeatedly failed in various assignments entrusted by the Ministry. It must be noted that knowing programming and development does not tantamount to a successful software company, but letting users migrate seamlessly and silently without letting users know of any such transition makes them successful software companies.

Moreover, these portals have focussed more on authentication and credentials, then on actual and real functionalities of the portal, creating heavy bottlenecks for the users of these portals. Earlier in V2 of MCA Portal, a single professional used to file work for multiple corporate entities in one go through single login, however, in the current V3 Portal, each Director/Partner/Stakeholder has to create their own account and login using their own credentials. Needless to say, these credentials have to be used by Professionals only. Not only it is ridiculous to assume that the owners of corporate houses come to file on any Government Portal, but it is equally ignorant of the Ministry and the developers who had failed to appraise the role of professionals in compliance, who guide, educate, polish and present the unpresentable filings which may otherwise cause substantial non-compliances. The LLP V3 Portal is full of such blunders. In light of these repeated failures, in key assignments, the GOI should come up with stringent SOP on how to migrate software vendors and what punitive action should ensue to the errant vendors. We also demand that an independent committee consisting of technocrats and professionals, to oversee the serious business of deployment of portal launched by GOI.

It is even pitiful to see the state of affairs of those LLPs or proposed LLPs who cannot change their constitution or create new ones, as per the needs of investment and strategic partnerships. When India is growing with booster dose, such portals are the fatal potholes which are the true deterrent to new start-ups, investments and growth of MSMEs. There is a Latin maxim “lex non cogit ad impossibilia” meaning “the law does not compel a man to do anything vain or impossible or to do something which he cannot possibly perform”. However, the LLP Rules mandate a late filing fee of upto 4 to 50 times of normal filing fees, until the forms are not filed on the portal. Stakeholders cannot be compelled or expected to do something which is impossible in absence of the basic infrastructure and facilities which otherwise is the duty and responsibility of the government. Thus, we demand that collection of such mindless late fees should be stopped until the portal is fully functional, up and working. Until that time the stakeholders should not be burdened with the apprehension of any punitive actions or late fees under the LLP Act. Also, we demand that an alternate mechanism to be established for accepting the physical forms manually or digital forms on email.

We hope that our above demands are reasonable and shall be met soon in the interest of the nation.

Thanks & Regards,

For Chartered Accountants Association, Surat.

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