Shop & Establishment Licenses: Obtaining & Cancellation

A Shop & Establishment License is required to legally run & maintain any shop or establishment within the territory of India. You need to adhere to certain rules & regulations & follow defined procedures for both – to get a shop license or to cancel the license & close the shop.

The hard work that goes into setting up a shop or establishment is not a mystery. However, there are times when you might decide to close your shop and cancel the registration. Irrespective of the reason behind doing so, you will be required to adhere to a certain procedure as specified by the Government of India.

In this article, we aim to highlight the procedure for both obtaining and closing a shop or establishment and review certain pointers that must be kept in mind while conducting both the processes.

Let us first dive in to what exactly is the Shop and Establishment Act in India under the provisions of which you may conduct the cancellation process.

Shop & Establishment Act in India

The Shop and Establishment Act, which is managed and governed by the Labor Department, guides and maneuvers everything related to the management of trade and running of shops or establishments in India. It governs and handles all existing laws and is related to the working of commercial establishments, societies, charitable trusts, printing presses, and hotels. It also defines laws on working hours, holiday rules, employee benefits, and leaves granted to engaged employees.

However, you must get a Shop and Establishment License to legally run and maintain any shop or establishment within the territory of India.

As mentioned before, you need to adhere to certain rules and regulations and follow defined procedures for both, to get a shop license or to cancel the license and discontinue the shop.

Eligible Entities for Shop and Establishment License

• Retail stores
• Service sector companies
• Wholesale shops
• Cafes and Eating houses
• Restaurants
• Residential hotels
• Theatres
• Warehouse/storerooms
• Places of public amusement/entertainment

Process to Obtain Shop and Establishment License

Adhere to the following procedure to obtain a shop and establishment license in India:

• Step 1: Visit your State’s Labor Department’s website to apply for the license.
• Step 2: Download the application form from the website.
• Step 3: Duly fill in all necessary details such as name of the proposed shop, name and details of the concerned employer, names and details of all employees, etc.
• Step 4: Upload relevant documents required to obtain the license. Note: Some States demand that the copies of documents and the duly filled form be submitted physically.
• Step 5: Pay the necessary fees for the process; it may vary depending on the type of business as well as the type of license you want.
• Step 6: After you submit the form and relevant documents, the Labor Department shall review the form and may even conduct an inspection of the business premises.
• Step 7: Post review and inspection, a license shall be issued for your shop/establishment that shall be valid for one year and may be renewed annually.

Note: The process to obtain a shop and establishment license may take up to 15-20 working days; it can vary from State to State.

Points to keep in mind when applying for a Shop and Establishment License

• The registered premises may be visited by the appointed Inspector.
• Business owners must display the certificate of shop and establishment registration somewhere easily accessible on the premises.
• The license must be timely renewed before its expiry date.
• In case you decide to close the establishment, you must inform the inspector in writing within 15 days of closing.
• Apart from the Shop and Establishment License, you must also obtain apt approval from your State’s Labor Department to start your business in that State.

Shop and Establishment License Cancellation Process

You must apply for cancellation of your shop and establishment license online. You may file your application by following the steps mentioned below.

• Step 1: Log in on the Municipal Corporation website.
• Step 2: Verification for cancellation of shop and establishment license is processed by sending a one-time password (OTP) to the applicant’s registered email ID or mobile number.
• Step 3: Open the license cancellation form that has been prescribed state-wise.
• Step 4: After duly filling in the mandatory fields in the form, submit the form along with supporting evidence (copy of paid dues to employees).
• Step 5: After completing the above-mentioned steps, take a printout using the ‘print’ option.
• Step 6: You must in writing inform your area inspector within 10 days of closing your shop.
• Step 7: The area inspector shall then verify the application and if found to be true, cancel your shop and establishment registration license.

Important Points to Ponder On

• There are different license cancellation forms for different states.
• There should be a valid reason mentioned in the cancellation form.
• You must only use the cancellation form prescribed for your state available on the website.
• The application must be filled in accurately, carefully and completely.
• The application must be filed within 10 days of closing the establishment.
• When applying for license cancellation, make sure you have mentioned the right shop and establishment license registration number.
• The application must include all details of the establishment, including name, address, registration number, and payment details.

Conclusion

Be it to start a business or close one, under India’s Shop and Establishment Act, you must be aware of the fact that there is a specific authority that deals with the workings and manages such businesses in India. Certain rules and regulations have been laid down to grant or cancel licenses to shop owners across India under the Shop and Establishment Act.

It is imperative for you to adhere to the rules and procedures laid down by this authority for both getting the license as well as getting it cancelled. However, the most vital detail to remember is that different states have different license-cancellation forms. Thus, you need to file the right application form if you do not want to deal with the entire process again.


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