Owing to significant development in the country in terms of incentivizing schemes, easy availability of resources and labour along with easier procedural formalities has made India one of the favoured destinations for business dealings. The Government has put in efforts towards the skill development and financial independence of the entrepreneurs in order to boost the economic structure of the country making it a more self-reliant production hub.
Trading in India...
Commercial transactions in India can be carried out by the entities using any of the corporate vehicles such as proprietorship, partnership, limited liability partnership, company, etc. An entity is allowed to carry out the fulfilment of its trade objectives provided the same as obtained due permission in the said regard.
Considering the nature of the business to be projects committed to be taken up, a corporate entity is required to obtain a Trade License. Issued by the local Government this license enables the entity to commence a new business. It is essential to be procured mandatorily before beginning manufacturing, exchange or storage of any activity/commodity.
The trade license certifies that the entity carrying out business operations adheres to the necessary legal requirements, safety and standard norms ensuring that no health hazard or nuisance by the conduct of trade. It ascertains the fact that no illegal or improper transactions occur in the name of trade by any entity. Valid for a period of one year this license requires renewal at annual basis.
Penalty for non-compliance
The trade license issued by the appropriate State authorities mandates obedience to the terms laid thereunder. There are various other provisions, rules, and regulations that are required to be followed by the registered entity. However, non-compliance to the same calls for penal provisions penalizing the license owner for breaking the law. Some of the penalties for contravention of the provisions of the trade license are stated below:
- If an entity violates the condition of license or cause nuisance in the neighbourhood or surrounding then the license might be cancelled or revoked;
- The entity committing a breach of the terms of the license or applicable laws shall make it liable to pay prescribed penalty;
- A fine of 50% of the license fees is levied in case of any delay in the trade license renewal process.
- An appropriate legal action can also be taken against the defaulting entity.
The fundamental principle behind the incorporation of stringent regulations for adherence is to discourage the conduct of any illegal activity and ensure the maintenance of discipline and clean environment. The freedom of trade commerce and intercourse of the entrepreneurs to do business should refrain from interfering with the public interest of right to life.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.