Understanding the Legal Framework of Trade Licenses in India

As per the Shop and Establishment Act,1953 a Trade Licence should be acquired under the government Shop and Establishment Act and Rules, 1953. It mentions the regulatory rules and the requirements which shall be followed for guaranteeing the best operation of a Company. Its a letter of authorisation which gives the applicant authorisation for carrying out a specific trade or business in a particular place or area.

While doing a business or getting involved in commerce, for making sure that all the safety requirement which are established by state municipal corporation are being followed. As, this protects from potential health hazards. It only allows the holder for getting engaged in trade or a company for which it was given.

Objectives of Trade Licence:-

The government issues such a type of licence for fulfilling the requirements of business. Apart from this, trade licence is issued for the following reasons:-

• For regulating the business in a particular locality or municipality
• For monitoring the activities in a business. Also, the local authorities could keep a constant check on the activities which are being conducted by businesses.
• Issuing such a licence will indicate that business is complying with the government rules.
• Local authorities could check whether a business has breached any law or caused any sort of nuisance.
• Businesses are much reputed in the eyes of the consumers. Consumers acquire much more confidence in these services.
• Acquiring such a Licence gets the businesses that will not use the residential premises for doing business. So, this type of regulation also ensures that the businesses are properly regu;ated.
• This form of the licence also enhances using environment-friendly substances for consucting activities in a particular locality. Dangerous chemical substances are not allowed when it comes to residential and municipal limits.
• Businesses which have this type of licence will take necessary precautions which will conduct some kind of activity. Businesses which have this also need to follow the guidelines which are issued by municipal or state governments.

Significance Of Trade Licence:-

Trade Licence are issued and regulated by the state government by the statutes of the municipal corporation. It helps to ensure that the trade and business health hazards do not affect negatively the public on many levels.

Such Licence are mandatory by government for carrying out business or trade in a particular are and making sure that any unethical practices is being done. Also, as all the business have to follow the required laws, regulations and the safety precaution, it also helps in fostering unity in the society.

Eligibility for Acquiring a Trade License

For securing a trade Licence in specific state, the applicants are required to fall in following criteria:-

• Age Requirement: Applicants should attain the age of majority.
• Clean Record: Applicants shall have no prior criminal history.
• Business Legitimacy: Business shall be of legal nature.

Who Issues Trade Licence:-

• Trade Licence are given by the local municipal corporation in many fields like engineering, industries, health, etc.
• It is approved by the government so it could be used for conducting this.
• It provides consent by giving documents/certificates for conducting a business or trade. Granting trade licence on state basis and according to the rules given by Municipal Corporation.

Advantages of Trade licence:-

The advantages of Trade Licence are:- 

1. Goodwill – There is an Increase in the goodwill, which increases customers and investors.
2. Protection from Liability – It protects the owner from particular type of liabilities.
3. Attracting Better Business Opportunities – As with better business practices companies could attract investment from other business organisations.
4. Registration – For conducting an Ethical business, a person could apply for acquiring Trade Licence Registration this ensures that the safety measures and guidelines are being followed.
5. Fine and Penalties – Not having a Trade Licence as required and doing business or trade. In these cases, the government will impose fines and penalties on such business, this can also leas to the closure of these business.

Businesses which require Trade Licence?

Food Business

It includes business and establishment which are dealing in food category. It includes a business which caters for the food and serves it. Belowmentioned ,  Business require Trade Licences:-

• Hotels, Restaurants, Canteens
• Malls, Theaters and Clubs
• Agricultural products .
• Bakeries, Confectionery Shops and Snack Shops
• Dairy needs store, Retailers and other premises

Trade and Related Services Business

Trade and Profession service includes the service for individuals which also require securing particular form of licence. Following Trades need to acquire such licence:-

• Barber Shops and Salons
• Cyber Cafes and Internet Parlors
• Small Manufacturing Units
• Medium Manufacturing Units
• Small Scale sectors

Industries involved in manufacturing

Any industry which is involved for manufacturing of the products will require this licence. 

• Medium Based Manufacturing Industries
• Large Manufacturing Units and Industry.

Importance of Trade Licence:-

Trade Licence have a significant important as:-

1. Regulation and Monitoring: It important as overseeing and controlling the trade activities in a particular area or in locality.
2. Public Health: It ensure that conducting such business does not puts danger to the public health by ensuring proper practices and prevention from improper misconduct.
3. Compliance with Rules: These licence guarantee that the business are adhering to the established rules, regulations and standards which promote ethical and lawful operation.
4. Restrictions: All these licence limit particular commercial activities which helps in maintaining safe and balanced environment.
5. Responsibility Oversight: It looks on the obligation of the business owners about trading activities which ensures accountability.
6. Evidence of Legitimacy: Having an E-Trade licence proves that business owner is engaged in legal and ethical trade and free from unlawful and unethical practices.

Documents Required:-

While applying for a Trade Licence, following documents are required:-

• Documents establishing the address of the business location.

• Identification proof of the person applying for the license.
• Aadhaar card details of the applicant.
• PAN details of individuals or PAN details of the firm or company.
• Memorandum of Association (MOA) and Incorporation Certificate (for Companies): 
• Documents outlining the structure and purpose of the company, along with proof of incorporation.
• Latest municipal property tax receipt or lease agreement/owner consent letter are required.
• Consent from neighboring property owners.
• A layout plan of the office space, certified by relevant authorities.
• Certificate of Approval from the Inspector of Factories
• Certificate issued by the Deputy Director of Public Health

Steps for Acquiring Trade Licence

First step visit municipal corporation website. Choose ‘Citizen Service’ from the municipal corporation website.

Sign up

The applicant has to provide necessary details such as the name, email ID, mobile number, etc. After the details are registered the system will give a USER ID and Password.

Form filing

After the ID and Password is generated, use the same for logging in the form.

Documents

Relevant Documents required for preparing the prescribed manner and shall be duly signed by concerned authority.

Upload Document

After all the documents are ready its required for getting uploaded online. Application form and documents need to be verified by Urban Local Body.

Unique Application Number

Once verified a Unique Application Number will be generated.

Fees payment

After all this documentation is completed. Do the fees payment by ‘Making Payment’ there are different modes of payment to choose.

Issue of license Number

After the documentation and the online process is completed then the Trade Licence will be issued.

Breach and Penalties:-

• Once this Trade Licence is took by applicant, it has to make sure that the compliance is being followed and maintained.
• If the applicant does not secures a Trade Licence then are consequences which could be imposed.
• If Business is started it operations without any proper licence, then a penalty or a fee needs to be paid.
• Defaulters could be prosecuted if there is non compliance.

Validity:-

Validity of trade licence is for a period of 1 Year and is required for renewal in every year.

Renewal of Trade License

The licence could be renewed subject to the following conditions:

• Usually, these licenses are renewed between 1st January to 31st March of respective financial year.
• Its valid for an Year.
• Applicant needs to make an application for Trade Licence
• It could be made Thirty days before expiration of Certificate.
• After the renewal, document have to be submitted to the concerned authority.

Conclusion

Trade Licence is an action which is taken by government for protecting the public from health dangers and annoyance which a trader and business could create. If authorities can detect some breach of rules and regulations which charge heavy fines and penalties.