Shop and Establishment Act Registration(SEAR)

Shop and Establishment Act Registration- Introduction

A ‘Shop and Establishment Registration’ or popularly known as ‘Trade license’ in many States and ‘Gumasta License’ in Maharashtra. Shops and Commercial Establishments Act 1958 was enacted to regulate the working hours, weekly/monthly off, payment of wages, terms and condition of employment, holidays, leave etc. of persons employed in shops, commercial establishments. Trade license issuing authority varies state to state, therefore Rules and Regulations of Trade license varies state to state as per State Shops and Establishment act or some other specific Act to regulate Shops and Establishments within the state and its process and documentation also varies slightly. Every employer shall within 30 days from the date on which the establishment, commence its work shall file statement together with fees to the Chief Inspector of the area concerned. In some state period for Registering may differ state to state.

Municipal Corporation or Local Authority is the concern department in the state/Locality to issue Trade License. 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 Labor 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.

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. 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.

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. 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.

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 commercial 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.