Read: Shops and Establishments Act licence Online in India (Step-By-Step)

Shop act licence is required for carrying on your business activity smoothly and the licence under the act is mandatory. Shop act licence procedure is slightly different in each state as the Act is different in each state but the basic procedure remains the same for registration as well as shop act licence renewal.

By Mehak Sharma in Startup

Oct. 6, 2018, 6:27 p.m.

  • 4011 Views

In India there are different legislations for different types of business but one legislation applying to small as well as big organizations is Shop and Establishment Act. Shop act licence is required for carrying on your business activity smoothly and the licence under the act is mandatory.  Shop act licence procedure is slightly different in each state as the Act is different in each state. 

What is Shop and Establishment Act?

It is an act which regulates the condition of work and enlists the right of employees in an unorganised sector. The act however does not restrict itself to commercial establishment but it extends to societies, charitable trust, educational institutes, and any other establishment which runs its business with the motive of earning profit. The Act also provide for the obligations of an employer.

The major requirement under Shop and Establishment Act is to obtain a shop act licence from the  concerned authority under the Act. Areas such as working hours, holiday and leave policy, overtime work policy etc. 

To be specific following are the aspects of the Shop and Establishment Act :

  • Hours of work

  • Interval for rest and meals

  • Prohibition of employment of children

  • Employment of young person or women

  • Opening and closing hours

  • Close days

  • Weekly holidays

  • Wages for holidays

  • Time and conditions of payment of wages

  • Deductions from wages

  • Leave policy

  • Dismissal

  • Cleanliness

  • Lighting and ventilation

  • Precautions against fire

  • Accidents

  • Record keeping

 

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Shop Act licence

Shop act licence is a mandatory licence required under the Shop and Establishment to run a business without any hindrance.  Within 30 days from the start of business the establishment has to apply for shop act licence. Registration under the act is mandatory for various reasons one of them being opening a current account in the bank in the name of business. Shop act licence is a basic licence required for any other licence required to carry on your business activities. 

Shop Act licence Procedure

As each state in India has different Shop and legislation so the basic procedure remains same for applying the Shop Act licence. For obtaining the licence under the Shop and Establishment Act an application has to be filed before the Chief Inspector within 30 days of inception of business. The application has to be submitted along with prescribed fees and should necessarily contain the following information :

  • Name of employer and name of manager, if any

  • Address of the place of business

  • Name of the organisation

  • Any other relevant information

Once the application has been received by the Chief Inspector, he will verify the application for its accuracy and correctness. Upon verification the details will be entered into the Register of Establishment maintained by Chief Inspector. After this he will issue an Registration Certificate which is valid for the period of five (05) years. After the validity period renewal of shop act licence can be made.
The Shop act licence process can be done online and can shop act licence renewal online be also done.  A Corporate lawyer can help you in obtaining the shop act licence and shop act registration. 

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Shop Act licence Process online

Shop act licence procedure can be done online as well as offline. However, with the ease of digitization online process to obtain shop act licence is gaining popularity as it saves a lot of time. Shop and Establishment Act registration online can be opted by anyone with the assistance of a corporate advocate who owns a business and is mandated to registration under Shop and Establishment Act, 1954. Establishment for this purpose will include a shop, commercial establishment (e.g. an office), residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment.

Online Procedure of Shop Act licence

To obtain the shop act licence online one has to apply for the application online at the labour department website of the respective state. For instance if anyone wish to apply for shop act licence online in haryana then an application can be filed on the website of labour department haryana. 
Form A has to be filed for online shop act licence and the form has to contain all the necessary information such as name of the establishment, its address, details of owner, employee details and type and nature of business.  Online shop act licence has to be filled in the two parts. Upon successful submission of the online application for shop act licence the registration certificate will be generated automatically on the labour department’s website. 
Process of shop act licence registration online is simple. It can be summarized in the following points -

  • Go to labour department’s website

  • Fill out the necessary form for registration

  • Print the electronically generated registration certificate.

Points to keep in mind while applying for shop act licence online or offline

  • If after obtaining the Registration Certificate there is a change to be made then the same should be notified to the Chief Inspector

  • Registration Certificate to be obtained not more than 90 days of the commencement of the business

  • Placement agencies providing domestic services to also be mandatorily registered under the Shop and Establishment Act

  • If you fail to obtain shop act licence under the act then you have to pay the penalty for the same.

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Shop Act licence Fees

Shop act licence fees for registration as well as renewal is same. Following is the fees for shop act licence as provided under the act for Shop and Establishment Act registration -
If no worker is employed - 100 INR
If employed workers are between 1 to 3 - 150 INR
If employed workers are 3 to 10 - 200 INR
If more than 10 workers are employed - 250 INR 
For shop act licence renewal if the application is time barred then compounding fees has to be paid alongwith the shop act licence fees. The condition for paying the compounding shop act licence fees in case of shop act licence renewal is as follows :

  • Renewal fees paid before 1st December - 0 INR

  • Renewal fees paid after 1st December but on or before 28th February - 10 INR

  • Renewal fees paid after 28th February - 10 INR + compounding fees

The Rate of compounding shop act licence fees for organisation with no worker is 100 INR, 150 INR for organisations with workers between 1 to 3, 200 INR for organisations with workers between 3 to 10 and 500 INR for organisations with more than 10 workers. 

Shop Act Licence Renewal online

Shop act licence renewal period initiates from the 5 years of the date of registration of the organisation under Shop and Establishment Act. As the registration is given only for five years thus renewal of shop act licence is mandatory for carrying on the business smoothly without facing the penalty. The application for shop act licence renewal has to be submitted with the Director of factories. 

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Shop Act Licence Renewal Documents

There are certain documents for shop act licence renewal which are enlisted below -

  • Duly filled up and completed Form No. 2 in triplicate 

  • The form has to be accompanied with the prescribed shop act licence fees

  • For endorsement of renewal, original licence.

The shop act licence renewal process and shop act licence renewal fees is same as the shop act licence registration process and fees. However, if the application for shop act licence renewal online or offline is time barred then additional compounding fee is also to be paid. 
Generally, the shop act licence renewal period is one year but a factory licence can be renewed for a period of five years. If the application for renewal of factory licence is made for five years then the shop act licence renewal fee has to be paid for the period of five year at once with the application.
An Application for shop act licence complete in all respects is required to be made in advance delivered in the office of the Director of Factories at least 30 days before the due date of expiry of the shop act licence, which is 31st December of the preceding calendar year for which the shop act licence has been granted /renewed /applied for renewal. If the application is submit late then the late fee @25% of the fee payable is also charged. The shop act licence renewal is done by the Deputy Director of Factories.

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Cancellation of Shop Act Licence

The shop act licence and Shop and Establishment Act registration can be cancelled by the Facilitator appointed under Shop and Establishment Act if it is found by him or brought under his notice that the application for obtaining shop act licence or for shop act licence renewal was based on misrepresentation or material suppression of facts or if the facilitator comes to know that the application for shop act licence or shop act licence renewal has been submitted along with false documents or false declaration. 
However, no cancellation of shop act licence can be done without giving an opportunity of being heard to the applicant whose licence revocation is in the question. If the facilitator is not satisfied with the response of the applicant then he can revoke the shop act licence of the establishment in the specified manner.

Effect of Closing of Business on Shop Act Licence

The Shop and Establishment Act states that an employer has to notify to the Facilitator within thirty days from the date of closing of the business that the establishment has been closed for business in such form and manner, as may be prescribed. The Facilitator on receiving the information and on being satisfied about its correctness shall remove such establishment from the register of establishments and cancel the registration certificate:
Provided that, if the Facilitator does not receive the information but he is otherwise satisfied that any establishment has been closed, he may remove such establishment from such register of establishments and cancel such certificate.

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