Shops and Establishment Act regulates shops, commercial establishments, hotels, clubs, restaurants, eating houses and other places of public amusement or entertainment. Shops and Establishment registration is covered under the state laws of India. Every state has its different set of laws for Shops and Establishment and they are to be followed properly. The employer of every shop/establishment is required to get itself registered under this Act within 30 days of commencement of work. Registration under the Shops and Establishment Act in the case of small businesses including proprietorship firms in the unorganized sector, it serves as a proof for the existence of the business.
The Shops and Establishment Act registration controls various terms of employment such as payment of wages, work hours, the interval for rest, meals, holidays, leave, and other situations of work of individuals working in various establishments. This registration is necessary for each business place of work excluding those who already come under the Factories Act 1948. Shops & Establishment Registration Certificate is a basic license and required to submit while applying for other licenses. For instance, it is required by most banks as proof of commercial business for the opening of the current account.
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.
Documents Required for Shops & Establishment Registration
Some states have a 100% online process or some states are still following the manual procedure. Since, Shops and Establishment is a state matter and hence, documents and fees criteria differ from state to state. However, the following are a set of documents, which are almost necessary for every state:
1. Photograph of the Shop/Establishment (Any photo of office, Shops, building, etc.)
2. Certificate of Incorporation, MOA & AOA of Company / LLP Agreement of LLP
3. Copy of PAN card
4. List of Directors or Partners and their ID & Address proof
5. Copy of Board Resolution or Partners Consent
6. Address proof of Company/LLP/Partnership/Proprietorship
7. Details of all the employees. if any
8. Proof of address of establishment (Sale deed, rent agreement, NOC)
Apart from the above information, the inspector may ask for further information and the same shall be supplied by the applicant. The fee for the whole process varies on how many workers are on employment in that particular organization/business.
Registration procedure for the Shops and Establishment Act
The following is the registration process for the Shops and Establishment license:
1. Check Applicability- Once you have started your business, then the first thing you must do is to check for necessary licenses. Almost within 30 days from the date of commencement of any business, the employer of the commercial shop/establishment should send an application to the inspector in-charge.
2. Procurement of Documents and Filing of Application- You are required to arrange all the necessary documents (list of documents required mentioned above). The application should be in the agreed form. Moreover, the employer should submit it along with the given fees. The Shops and Establishment Act is a state actor and hence, the process for each state is different. Indeed it depends on the type of establishment/business and the state in which you are applying for registration.
On the satisfaction of the inspector in-charge, the registration of the Shops and Establishment will be successful and the employer will get a registration certificate. Prominently, the registration certificate must be displayed at the establishment, and the employer is required to renew the license periodically as per respective state law.
Amendment in Shops & Establishment Registration
If there is any change in details submitted at the time of making an application, such as a change in address, the employer is required to apply for an amendment in Shops & Establishment Registration Certificate with the concerned officer, within the prescribed time. In case of closure of the establishment, the employer is required to apply for surrender of the certificate to the respective officer. The officer on being satisfied with the correctness of the application will issue a fresh Registration Certificate for amendment or will serve an order for the cancellation of an existing registration.
The Shops and Establishment Act regulates conditions of work, lists the rights of employees in the unorganized sector and provides a list of obligations for every employer. However, this is best suited for shops all across India, every benefit making foundations, lodgings, bistros, eating circles and joints, eateries, cinemas and for all public places of entertainment.
DISCLAIMER- This write-up is based on the understanding and interpretation of the author and the same is not intended to be professional advice.
ABHA TYAGI, (ACS, B.COM), Legal & Secretarial Consultant