The Shop And Establishment Act  - The Law That Governs Indian Businesses

The Shop And Establishment Act - The Law That Governs Indian Businesses

LegalKart Editor
LegalKart Editor
06 min read 209 Views
Lk Blog
Last Updated: Apr 10, 2024

Business Is The Crux Of A Vibrant Society & Happening Economy 

Business is the lifeline of any moving, vibrant society. Society and economy are centred around business and commercial activities. It is owing to business and commercial establishments that all the exchanges and (financial) interactions that keep happening and keep moving.   


The Importance Of Laws For Shops And Commercial Establishments 


Businesses fuel all the intra-social and inter-social movement and growth. Like various other crucial aspects, businesses are also governed by some laws, rules and regulations. One significant law which governs the businesses and countless shops and commercial establishments is the Shop and Establishment Act. 

Read Profession Is The Link Between An Individual And The Larger Society

The Shop And Establishment Act 

Every state has its own Shop and Establishment Act (“Act”). However, the general provisions of the Act are the same in all states. The Shop and Establishment Act is regulated by the Labour Department of the respective states. The Act regulates all the shops and commercial establishments operating within the state. The respective states issue the registrations under the Act, and thus it slightly differs from one state to another state.

The Scope And Expanse Of This Act 

Shops are generally defined under the Act as the premises where the selling of goods take place either by retail or wholesale or where services are rendered to customers. It includes offices, godowns, storerooms and warehouses used in connection with the trade or business.

What Are Considered As Commercial Establishments? 

Commercial establishments are generally defined as a commercial, banking, trading or insurance establishment or administrative service in which persons are employed for office work. It includes a hotel, boarding or eating house, restaurant, cafe, theatre, or other public entertainment or amusement places. However, factories and industries are not covered by the Act and are regulated by the Factories Act, 1948 and Industries (Development and Regulation) Act 1951.

Registration Procedure Under The Shop and Establishment Act

The shops and commercial establishments covered under the Act must mandatorily apply for registration under the respective state Act. All establishments and business, including the people working and maintaining a business from home, must obtain a Shop and Establishment Registration Certificate or Shop License (“Certificate”) under the Act.

Who All Can Procure This Certificate? 

The proprietors who run a business from home without having any physical store or premises are also required to obtain this Certificate. The proprietors of e-commerce business or online business, or online stores and establishment must register under this Act and obtain the Certificate. Every shop and commercial establishment should register itself under the Act within 30 days of commencement of business.

This Certificate Is The Evidence Of Being Authentic Businesspersons 

The Certificate or the Shop License acts as a basic registration/license for the business. This Certificate is produced for obtaining many other business licenses and registrations. It serves as proof of the incorporation of co.mmercial establishment or shops. It is also useful when the proprietor of the business wants to obtain a loan or create a current bank account for the business. Most banks will ask for this Certificate for opening a current bank account.

You may also read Know About The Founders Agreement.

Regulations Under The Shop and Establishment Act

The Act, among other things, regulates the following matters-

  • Hours of work, annual leave, weekly holidays.

  • Payment of wages and compensation.

  • Prohibition of employment of children.

  • Prohibition of employing women and young persons in the night shift.

  • Enforcement and Inspection.

  • Interval for rest.

  • Opening and closing hours.

  • Record keeping by the employers.

  • Dismissal provisions.

Process For Obtaining Shop and Establishment Registration

The procedure for obtaining the Shop and Establishment Registration Certificate differs from state to state. It can be obtained online or offline.

For obtaining the registration certificate online, the proprietor or owner of the shop or business must log into the respective State Labour Department website. The proprietor or owner must fill the application form for the registration under the Shop and Establishment Act, upload the documents and pay the prescribed fees. The prescribed fees differ from state to state. Once the registration form is approved, the registration certificate will be issued online to the proprietor or owner of the business.

You may also read about Partnership Firms.

For obtaining the registration certificate offline, the registration application is to be filled and submitted to the Chief Inspector of the concerned area along with the prescribed fees. The Chief Inspector will issue the registration certificate to the owner or proprietor after being satisfied with the correctness of the application.

The registration application form contains the details relating to the name of the employer and establishment, address and category of the establishment, number of employees and other relevant details as required. The registration application needs to be renewed before the expiry of the period of registration. The validity of the Shop and Establishment Certificate differs from state to state. Some states provide the Certificate valid for a lifetime, while other states provide the Certificate valid for one to five years.

Documents Required For Shop And Establishment Registration

The documents required for obtaining the shop and establishment registration certificate is-

  • Shop or Business Establishment address proof.

  • ID proof of the proprietor.

  • PAN Card of the proprietor.

  • Details of the employees.

  • Payment challan.

  • Additional business licenses necessary for starting the business, if any.