LICENSE UNDER SHOP AND ESTABLISHMENT ACT,1947

 LICENSE UNDER SHOP AND ESTABLISHMENT ACT,1947

The Shops and Establishment Act registration issued under the Shops and Establishment Act is mandatory for all persons, companies and legal entities planning to set up a commercial establishment or shop. In India, the State Legislation enacts the Shop and Establishment Act (Act), and thus it differs from state to state. 

However, the Shops and Establishment Act drafted by all states are similar in nature and regulate the working hours for employees, annual leaves with wages, compensation, employment of women and children, and other aspects of the commercial establishments and shops in their state.  

The registration under the Act is known by various names in different states. For instance, in Bihar, it is known as the Trade License; in Maharashtra, it is called Gumasta License; in Delhi, UP and Haryana, it is known as the Shop and Establishment license. 

Eligible Businesses Under the Shops and Establishments Act

As per the Shops and Establishments Act, the proprietor or owner of the shops and commercial establishments must obtain the registration. According to the Act, a commercial establishment means and includes:

• Registered and unregistered charitable trusts or other trusts.
• A society registered under Societies Registration Act, 1860.
• An establishment that provides services or does office work. 
• An establishment of a medical practitioner, legal practitioner, architect, accountant, engineer, tax consultant, contractors, auditors or any other professional or technical consultant.
• Journalistic and printing establishments.
• Educational or other institutes run for private gain.
• Quarries and mines not governed by the Mines Act, 1952.
• A premises where the business of insurance, banking, brokerage, stocks and shares is undertaken.
• Cinemas and theatres. 
• Restaurants, bakeries, hotels, cafes, clubs, refreshment houses and eating houses.
• Public places of entertainment or amusement. 

In addition to the establishments mentioned above, the state government can declare additional establishments eligible to register under the Act.

Shops mean any premises where:

• Business or trade is carried on where goods are sold, either wholesale or retail.
• Services rendered to customers. 
• Offices, godown, store-room, workplace or warehouse, whether in the same premises or otherwise, used in connection with the trade or business.

Exempted Businesses Under the Shops and Establishments Act

The Shops and Establishment Act exempt certain businesses, and thus the following establishments and shops are generally not required to obtain the Shops and Establishment Act registration: 

• Offices under the Central Government, state governments, and local authorities, except commercial undertakings.
• Any water transport service, railway service, telegraph or telephone service, postal, business, or undertaking supplies light, power, or water to the public.
• Railway dining cars.
• Establishments of the Food Corporate of India (FCI).
• Establishments for the care or treatment of the infirm, sick, or mentally unfit.
• Offices of a banking company.

The exemption for the business or establishments varies from state to state. Each state government has prescribed the exempted businesses or establishments under their state Shops and Establishments Act. Thus, the state government can declare additional businesses or establishments exempt from obtaining registration in addition to the establishments mentioned above.

The sections relating to opening and closing hours and weekly holidays of the Act does not apply to the following businesses:

• Shops dealing in medical, medicines, or surgical appliances or requisites.
• Clubs, boarding houses, residential hotels, hostels attached to colleges or schools.
• Refreshment rooms and stalls at bus stands, railway stations, ports or airports.
• Hairdressers and barbers shops. 
• Shops dealing in fish, meat, eggs, poultry, bread, dairy produce, sweets, confectionery, ice-cream, chocolates, fruits, cooked food, vegetables, flowers, or green fodder.
• Shops dealing in articles needed for burials, funerals, or cremations.
• Shops dealing in the pan with beedies or cigarettes or liquid refreshments sold retail for consumption on the premises.
• Shops dealing in periodicals or newspapers, offices of news agencies and editing sections of newspaper offices.
• Theatres, cinemas, places of public entertainment, and stalls or refreshment rooms attached to theatres, cinemas, and places of public entertainment.
• Establishments for the retail sale of petrol.
• Shops in garrison shops, regimental institutes, and troop canteens in cantonments.
• Tanneries.
• Retail trade carried on at a show or exhibition if such retail trade is ancillary or subsidiary only to the primary purpose of the show or exhibition. 
• Flour mills and oil mills not registered under the Factories Act, 1948.
• Lime and brick kilns.
• Information technology establishments.
• Bio-technology and research centres or establishments of the epidemic and other diseases.

Shops and Establishments Act Registration Process

The registration process under the Act is as follows: 

• The owner/proprietor of an establishment (applicant) must apply for the registration within 30 days of commencing the establishment. 
• Each states’ labour department is responsible for processing and issuing the Shops and Establishment Act registration.
• The applicant can obtain the registration form from the Chief Inspector under the Act (Chief Inspector) of the concerned area, fill it and submit it with the required documents. 
• The applicant can also fill the form online on the state labour department website and submit the physical copy of the online application to the Chief Inspector.
• The applicant must provide the following details of the establishment:
  • Name of the employer.
  • Name of the establishment.
  • Address of the establishment.
  • Category of the establishment.
  • Number of employees.
  • Date on which the establishment started working.
• The applicant needs to pay the prescribed fees while submitting the application. The registration fee varies depending on the state where the shop or establishment is registered.
• The Chief Inspector will check all the details, visit the establishment (if required), and provide a registration certificate valid for one to five years.
• Usually, the district labour officer/labour commissioner is the Chief Inspector under the Act.
• The applicant must display the registration certificate at the shop or establishment.
• The applicant must renew the certificate before the expiry of its validity period.

Documents Required for Registration Under the Shops and Establishments Act

• Photograph of the shop or establishment and its name board. 
• Shop or establishment address proof.
• Certificate of incorporation,  LLP agreement, partnership deed, Memorandum or Articles of Association.
• PAN card of the proprietor.
• ID proof of the proprietor.
• Address proof of the establishment or shop.
• Details of all employees.
• Payment challan.

Benefits of the Shops & Establishment Registration 

1. Proof of Legal Entity- Shops & Establishment Registration Certificate acts as a legal entity proof of Shops and other commercial establishments which gives a right for doing the business in that particular area. 

2. Business Bank Account- This fulfills one of the documentation requirements of banks to open a current bank account which is legal entity proof. As per RBI norms, each shop & establishment is required to open a separate bank account for the daily transactions. Based on the Shops & Establishment registration certificate, you can easily open a current business bank account.

3. No Compliance Cost- Presently, after getting registered shops/establishments do not require any compliance. So, there will be only a one-time cost i.e. cost of obtaining the Shops & Establishment Registration Certificate. 

4. Smooth inspections- If an inspector from the state government and local municipality conducts inspection visits for checking the proper working of Shops/establishments and you have the Shops & Establishment Registration Certificate, then you can quickly get over the inspections every time as you are already registered. 

5. Government Benefits- Each state has a DIC Department which acts as a policymaker in the respective state for all small business. The Shops & Establishment Registration Certificate enables easy availment of various government benefits. 

6. Online Facility- Most of the states provide the facility of online Registration under Shops and Establishment, which makes the whole process hassle-free and time-efficient.

Tamilnadu Shop and Establishment Registration Act,1947

https://www.lwb.tn.gov.in/register.php

Disclaimer: This article is for the purpose of information and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not to be used for rendering any professional advice. This article is written on the basis of author’s personal experience and provision applicable as on date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of others readers.