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The Shops & Establishment registration is a state-based labour license. Shops And Establishment act was enacted to regulate the working hours, weekly/monthly off, payment of wages, terms and condition of employees working with an organisation or employed in shops, commercial establishments. The Shops & Establishments Act varies from State to State, and are rooted in the Central Shops & Establishments Bill which was promulgated by the Ministry of Labour as a model guidelines on which States could build their own acts.
For the reader's ease, we have shared the information in the form of FAQs:
Question 1. Applicability of Shop and Establishment Act?
Answer: Shop & Establishment registration is mandatory for every person who is starting any business or shop under the respective state. Important definitions that one must aware of are as follows:
Shop: means any premises where
a) goods are sold either by retail or wholesale or
b) where services are rendered to customers, and
It includes an office, a store-room, godown, warehouse or workhouse or workplace, whether in the same premises or otherwise, used in or in connection with such trade or business.
Note: But does not include a factory (it covers under the Factories Act, 1948).
Establishment: means
a) a shop, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment; and
b) Includes such other establishment as Government may, by notification in the Official Gazette, declare to be an establishment.
Commercial Establishment: any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried on.
Question 2. Important timeline under the Act?
Answer:
a) Timeline for Registration: Every shop or establishment that commences operations must apply to the Chief Inspector for a Shop and Establishment License within 30 days from its commencement.
b) Timeline for Renewal: Renewal must be completed before the expiry of the existing license.
c) Timeline in case of any change: It shall be the duty of the business owner/occupier to notify to the Chief Inspector, in a prescribed form about any change in respect of any information submitted with the department at the time of procurement of shop & establishment license. The business owner shall notify the chief inspector within thirty days after the change has taken place.
Question 3. Process for registration under Shop & Establishment Act?
Answer: As this registration is governed by the state, the procedure may be a little different in every state. As per the Shop and Establishment Act, every entity shall approach the Department of Labour for obtaining shop and establishment license.
Below mentioned are the steps involved in every registration process:
Step 1: Submit an application in the prescribed form to the Chief Inspector of the area within 30 days of starting any work in your shop/establishment. The application is to be submitted along with the prescribed fees. (Government fee varies from State to State.)
Step 2: On receipt of your application the Inspector shall verify the accuracy and correctness of the application.
Step 3: on being satisfied with the correctness of the details, an inspector will visit your establishment in order to verify the details and will issue the registration certificate/licence in accordance with the Act.
Question 4. Documents required for registration?
Answer: Since every State has different Rules & Regulations for Shop & Establishment Registration, the list of documents required tends to vary from State to State.
However, a general list is given for reference:
a) Copy of PAN card of the entity
b) Details regarding the nature of business
c) Self- attested copy of identity proof of proprietor/partners /directors/trustees etc.
d) Self-attested copy of residential proof of proprietor/partners /directors/trustees etc.
e) Premises Address Proof
i) If Rented: Rent Agreement and utility bill likely electricity bill, telephone bill, etc & No Objection Certificate from Owner.
ii) If Owned: Ownership proof. For example receipt of municipality tax paid.
f) Memorandum/Articles of Association/List of Directors. (as applicable)
g) Photographs of the shop or commercial establishment.
h) Details of Employee along with address, date of joining and working hours etc.
Question 5. Is there any formality required to be followed post-closure of business?
Answer: The occupier shall within fifteen days from the date of closure of the establishment, notify to the Chief Inspector in writing accordingly. The Chief Inspector shall on receiving the information and being satisfied with the nature of closure remove such establishment from the register of establishments and cancel the registration certificate.
Provided that, the Chief Inspector may not, if satisfied that the establishment is likely to re-start within a period of six months, remove it from the Register of Establishment and cancel the registration certificate.
Conclusion: The Shop and Establishment Registration is a basic license that provides an entity with a legal identity. This license makes an entity a registered business establishment in the eyes of law. Moreover, it helps to avail Government benefits that are provided from time to time only to those registered under this Act. Nowadays this is one of the most important registration for every entity because as per the advisories issued by the various states during COVID 19 outbreak, it is mandatory for every entity to have this registration in order to commence its business operation once the situation normalises. In case of unavailability of the same, there are penal provisions mentioned under the state acts. Hence, it is preferable to register your entity under the Shop and Registration Act.
Article By: Ms Bhavya Sharma, a Practising Company Secretary from Delhi. In order to know more about the registration process, you can connect with us. You can contact us at Legal@bhavyasharmaandassociates.com or for more details you can visit: www.bhavyasharmaandassociates.com
Disclaimer: Although due care and diligence have been taken in preparation and uploading this Article, Bhavya Sharma & Associate shall not be responsible for any loss or damage, resulting from any action taken on the basis of the contents of this Article. Anyone wishing to act on the basis of the material contained herein should do so after cross-checking with the circulars, notifications, applicable acts, press release issued by the concerned department or seek appropriate counsel for their situation.
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