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- Representation for removal of hardship caused by CGST Rule 86B
- Deepanshu Yadav
July 15, 2025
Representation for removal of hardship caused by CGST Rule 86B
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The Association of Tax Lawyers seeks reconsideration of Rule 86B, citing hardship to genuine taxpayers and calling for deletion or
Summary: Compounding is a legal mechanism under the Companies Act, 2013, allowing companies and their officers to regularize compliance lapses and avoid severe legal repercussions. This process involves settling an offense by paying a monetary penalty rather than undergoing formal adjudication. The Regional Director (RD) handles offenses with maximum fines up to ₹25 lakh, while the National Company Law Tribunal (NCLT) addresses those exceeding this amount. Compoundable offenses are typically punishable by fine only, or fine and imprisonment, whereas non-compoundable offenses involve imprisonment solely or with a fine. Applications for compounding can be initiated by the company, an officer in default, or the Registrar of Companies (RoC). The procedure involves identifying and rectifying the non-compliance, preparing and filing the application with supporting documents, following up with authorities, paying the compounding fee upon approval, and finally, filing the order with the RoC. Common compoundable offenses include delays in filing annual returns or financial statements, failure to appoint key managerial personnel, or non-maintenance of statutory registers. The benefits of compounding include avoiding prosecution, reducing litigation costs, promoting voluntary compliance, and enhancing corporate governance. The Ministry of Corporate Affairs (MCA) encourages this process to streamline compliance and reduce litigation backlogs, aligning with efforts to improve ease of doing business.
Introduction
A Company during its course may have, inadvertent lapses in compliance with the provisions of the Companies Act, 2013, whether it is a delay in filing statutory returns, non-appointment of a key managerial personnel, or default in maintaining statutory registers, or such other defaults which attract penalties and legal consequences, which is governed by Section 441 of the Companies Act, 2013, and rules made thereunder, allowing companies to regularize non-compliances and mitigate legal risk.
What is Compounding?
Compounding is a legal process where an offence committed by a company or its officers is settled by paying a monetary penalty, instead of undergoing adjudication and facing legal consequences.
Authorities Involved
The Indian Company Law empowers the following authorities – to compound offences committed by a company or its officers:
- The Regional Director (RD) – For offences where the maximum fine does not exceed ₹25 lakh.
- The National Company Law Tribunal (NCLT) – For offences where the fine exceeds ₹25 lakh.
COMPLIANCES TO BE UNDERTAKEN BY A COMPANY UNDER IEPF
| Form No. | Description | Timeline | Reference of IEPF Rules |
|---|---|---|---|
| IEPF-1 | Statement of amounts credited to Investor Education and Protection Fund (IEPF).
This e-form is required to be filed for transfer of any unpaid / unclaimed amounts lying with the Company for 7 (seven) consecutive years to IEPF. The following is the step by step process: 1) File e-form IEPF-1 with MCA 2) Generate NEFT challan (using pay miscellaneous fee at MCA website) by using the SRN of the challan generated by filing e-form IEPF-1 3) Request letter to be sent to the Bank (having dividend account) along with the NEFT challan for transfer of the unpaid / unclaimed amounts to the Designated Bank 4) Bank to transfer the amounts to the Designated Bank 5) Obtain UTR from the Bank 6) Link the NEFT payment at MCA website to generate MCA payment receipt 7) Upload Investor-wise excel (containing name, address, father’s name, folio no., unpaid / unclaimed amounts etc.) of the Investor) on IEPF website within 7 days from the date of filing e-form IEPF-1. |
Within 30 days from the due date of transfer (i.e. after expiry of 7 years from the date the amount became due for payment). | Rule 5(1) of IEPF Rules.
[Last amended vide MCA notification dated 14.08.2019 effective from 20.08.2019]. |
| IEPF-2 | Statement of unclaimed and unpaid amounts as on the date of closure of financial year the account of which are to be adopted in the AGM
The following is the process: 1. Obtain details of all unpaid / unclaimed amounts (as specified under Section 125(2) of the Companies Act, 2013 lying with the Company as on 31st March) 2. File e-form IEPF-2 with MCA 3. Upload Investor-wise excel (containing name, address, father’s name, folio no., unpaid / unclaimed amounts etc.) on IEPF website within 7 days from the date of filing e-form IEPF-2 4. Upload Investor-wise excel on Company’s website |
Within 60 days of AGM or the date on which it should have been held as per the provisions of section 96 of the Act, whichever is earlier. | Rule 5(8) of IEPF Rules.
[Last amended vide MCA notification dated 14.08.2019 effective from 20.08.2019]. |
| Company to nominate a Nodal Officer (Director / CFO/ CS of the Company to be designated as such) for verification of claims and coordination with IEPF.
Company may appoint one or more Deputy Nodal Officer to assist the Nodal Officer. Details of Nodal Officer and Deputy Nodal Officer to be communicated to IEPF and details of Nodal Officer and his email id to be displayed on Company’s website. Any change in the nodal officer or his details shall be communicated to the Authority through Form IEPF 2 along with board resolution thereof. Post approval of e-form IEPF-2, Nodal Officer / Deputy Nodal Officer are required to register themselves as Nodal Officer / Deputy Nodal Officer – IEPF on MCA Website using their PAN. |
Within 15 days from 20.08.2019.
Within 7 days of any change along with Board Resolution thereof Post approval of e-form IEPF-2 |
Rule 7(2A) and 7(2B) of IEPF Rules.
[Vide MCA notification dated 14.08.2019 effective from 20.08.2019]. |
|
| IEPF-3 | Statement of shares and unclaimed or unpaid dividend not transferred to IEPF due to the following reasons:
• Where there is a specific order of court or tribunal or statutory authority restraining any transfer of shares and payment of dividend; or • Where such shares are pledged or hypothecated; or • Shares have already been transferred. |
Within 30 days from the end of Financial Year. | Rule 6(3)(b) of IEPF Rules.
[Last amended vide MCA notification dated 28.02.2017 effective from 28.02.2017].
|
| Newspaper Publication
|
The Company to inform at the latest available address of the shareholders regarding due date of transfer of shares and also simultaneously publish a notice in the leading newspaper in English and regional language having wide circulation.
Details of such shareholders to be made available on the Company’s website. |
3 (three) months before the due date of share transfer. | Rule 6(3) of the IEPF Rules.
[Last amended vide MCA notification dated 28.02.2017 effective from 28.02.2017].
|
| IEPF-4 | Statement of shares transferred to the IEPF.
The following is the step by step process for transfer of shares to IEPF: 1) Identify the Investors whose dividend are lying unpaid / unclaimed for 7 (seven) consecutive years 2) Identity corresponding shares and obtain data from RTA 3) Execute corporate action with the depositories 4) Obtain corporate action confirmation from depositories 5) File e-form IEPF-4 [attach a public notice published under clause (a) of rule 6(3) in Form IEPF-4] 6) Upload Investor-wise details within 7 days of filing e-form IEPF-4 Process for physical share transfer: 1) The Company Secretary / Authorised person to make application on behalf of the concerned shareholder to the Company for issue of new share certificate 2) On receipt of application, a new share certificate in form no SH-1 for each shareholder shall be issued and it shall be stated on face of it “issued in lieu of share certificate no…for the purpose of transfer to IEPF” and the same shall be recorded in the register 3) After issue, the Company to inform the depository by way of corporate action to convert such certificates into DEMAT form in favour of Authority. |
Within 30 days of corporate action. | Rule 6(5) of IEPF Rules.
[Last amended vide MCA notification dated 13.10.2017 effective from 13.10.2017].
|
| IEPF-5 | Application by Investor to the Authority for claiming unpaid amounts and shares out of Investor Education and Protection Fund (IEPF)
Nodal Officer to verify the Claim of the Investor and send online verification report to the Authority along other documents as specified in IEPF Rules. |
Within 30 days from the date of receipt of claim. | Rule 7 of IEPF Rules. |
| IEPF-7 | Statement of following amounts credited to IEPF on account of shares transferred to the fund:
• If the Company is getting delisted, the authority shall surrender shares on behalf of shareholders in accordance with the SEBI (Delisting of Equity shares) Regulations, 2009 and the proceeds realised shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds. • In case the Company whose shares or securities are held by the Authority is being wound up, the Authority may surrender the securities to receive the amount entitled on behalf of the security holder and credit the amount to the fund and a separate ledger account shall be maintained for such proceeds. • Any further dividend received on such shares transferred to IEPF shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds. |
Within 30 days from the date of remittance. | Rule 6(13) of IEPF Rules.
[Last amended vide MCA notification dated 22.05.2018 effective from 22.05.2018]. |
| IEPF-1A | For all unpaid amounts referred to under Section 205C of the Companies Act, 1956 which were transferred to IEPF but investor wise excel not uploaded as required under Rule 5(1) of the Rules. | 20.08.2019
(within 60 days from 20.08.2019). |
This was a one-time filing requirement.
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