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Shailza Sharma
| Updated: 15 Jan, 2020 | Category: Shop and Establishment

Wondering why Shop and Establishment License is Required for Business?

Shop and Establishment License

In India, every state has enacted certain rules and regulations with regards to work conditions. Shop and Establishment act (Hereinafter called as Act) works on the objective to secure the uniform benefits for employees, who are working in various establishments, shops, commercial establishments, residential hotels, restaurants and theaters. Under the pursuance of the Act, Shop and Establishment License is compulsory for all business entities. If a person has established any business entity than he is required to obtain a shop and establishment license for the purpose of carrying business within 30 days of commencement of business. 

What is Shop and Establishment License?

Shop and Establishment License is also known as “shop license” informally.  This license is mandatory to carry businesses such as – shops, commercial establishment, restaurants, hotels or any public amusement. The objective behind the license is to regulate the work conditions and to ensure protection of the rights of the worker. It’s important to know that rules and regulations of shop and establishment act is applicable over every business entity, who is engaged in employing people as casual workers, full-time worker, or on contract-based.

Shop and Establishment Act in India

Shop and establishment act is governed by Department of labor, and it regulates the area wherein any trade, professions or business is being carried out. In furtherance, Act is just not applicable to working of commercial establishments but also societies, charitable trusts, educational institutes.

Aspects regulated under the Shop and Establishment Act

Aspects regulated under the Shop and Establishment Act

About Shop and Establishment License

Meaning of shop – A premises where any business or trade is carried and numerous services are being delivered to the customers. It also includes offices and warehouses which are established for the purpose of trade.

Objective – The main objective of Shop and Establishment license is to govern and improve the working conditions of shop or working premises, rights of the employees, their wages, leaves and working hours.

Validity –Validity of License varies from state to state. In some of the state, the validity is for a lifetime. Whereas in some state validity ranges from 1 to 5 years.

Who should obtain Shop and Establishment license?

  • Every individual who is running a shop or any place where any business activity can be carried;
  • Business entities are having an office or any office branch, where any commercial activity is carried out.

Documents need to submitted

  • Passport size photo of the applicant
  • Photo of the owner along with shop
  • List of management employees and director(If applicable)
  • Details of employee  (Along with details of working duration of the employee, positions of employee, wages, Number of working days of company in a year)
  • Address proof of establishment(Copy of rent agreement, NOC from the owner if the premises is rented
  • Affidavit needs to be shared by the applicant  
  • PAN Card
  • ID proof

Read our article: A Complete Overview of Shop and Establishment Act And How to Obtain its License?

How to Obtain Shop and Establishment License?

 Any owner of shop or commercial establishment, who has commenced the operation, must apply to chief inspector for shop and establishment license within the prescribed time and format. The application must contain the information like-

  • Name of the Employer
  • Address of the Establishment
  • Name of the Establishment
  • Category of the  Establishment
  • Number of the Employees
  • And, other relevant information needs to be furnished as requested 

On submission of application, Chief inspector will review the application. On the review, if inspector found no glitch in the information, the shop and establishment will be registered, and certificate of registration will be issued to the occupier. It’s mandatory for the occupier to prominently display the certificate at its shop or establishment and renew it according to the provisions of the Act.

Complete Procedure;

  • Firstly, Submit the application in the prescribed format to the area inspector within 3o days of commencement of new business whether it’s a shop/establishment. Application needs to be furnished along with the information related to ;
  • Employer and name of the manger, if any
  • Postal address of the establishment
  • Name of the establishment
  • Any other relevant information relation to establishment
  • Secondly, on receiving of application for registration, inspector will verify the details furnished;
  • If inspector finds no complication in the details, will enter the details in the register of establishment. Further, he will issue a registration certificate which will be valid up to 5 years (Validity varies from state to state).
  • Certificate needs to be prominently displayed at the establishment.

Any change in Information

If any change is required in the information furnished during the registration process, then it is required to furnish the change in details to the inspector’s office within 15 days after such change.

Now, again the inspector will verify the correctness of details furnished and will make the changes in register of establishment. After such changes fresh certificate will be issued or as he may deem fit.

Closing of Establishment

The closing of establishment should be notified to the inspector within the 15 days of closing. The notification is to be made in writing “the date of closure and return of registration certificate”.

After receiving such information, inspector shall remove the name of establishment from register of establishment and cancel the registration certificate.   

Advantages of Shop and Establishment License

On the time when a person set up shop, he becomes legally responsible for all activities of his business. Activities like trade, manufacturing even debts and losses. Debts and losses can lead to loss of personal assets like home or car. If such shop owner has already obtained the license, his business becomes the separate legal entity. Becoming the legal entity makes the owner protect his personal assets from any business activity.

Key benefits are like;

  • After obtaining  the license, there will be proper regulation of  working hour at premises;
  • Entity can regulate separate regulation regarding the female staff;
  • It will help in establishing the current bank account  with the bank by undergoing a simple process;
  • No further compliances are required after registration ;
  • No audit is required for acquiring a license;
  • It’s a completely online process and is completed in a very minimal time period.

Penalties

Section 13(6), provides the information related to penalties on not complying with the provision of the section. According to the section, in contravention of or on the failure to comply with the provision of this section shall be convicted with the fine which shall not be less than one thousand rupees, which can be extended to three thousand rupees along with the prescribed registration or renewal fee as the case may be.

How Corpbiz will help in Obtaining a License?

Team of experts working with Corpbiz has experience and high success rate in providing license by undergoing simple and fast process. They will assist you in-

  • Providing consultation in terms of requirement of documents, a requirement of license;
  • Drafting of application
  • Verifying of documents to avoid any cancellation of license
  • Follow up  of process through email and telephone
  • Issuance of certificate in very minimal time period

Final Thoughts

In this article we have tried to cover maximum information related to Shop and Establishment License. However, if you are looking for more information related to the License, Corpbiz is the one-stop solution for all your queries. Please feel free to contact us and get your license with hassle-free process.

Read our article:Differences Between Trade License And Shop and Establishment License

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Shailza Sharma

Miss Shailza Sharma, BA. LLB graduate from Himachal Pradesh University. She holds an experience of 2.5 years in various Legal companies and organizations.

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