A Consultancy Guide for Restaurants and Hospitality Businesses in India

 

Introduction

 

The restaurant and hospitality industry in India is growing at a rapid pace, with increasing demand for dining and lodging options. However, with growth comes the need for compliance with various legal and regulatory requirements. In India, the restaurant and hospitality industry is subject to various laws, such as the Food Safety and Standards Act, the Shops and Establishment Act, the GST Act, and many more. Compliance with these laws is crucial to avoid penalties, legal disputes, and damage to the reputation of the business. Therefore, it is imperative for restaurants and hospitality businesses to understand and comply with the applicable laws and regulations to operate legally and sustainably. In this context, engaging professional consultancy services can be highly beneficial for businesses to navigate the complex compliance landscape and stay on the right side of the law.

 

 

Compliances Requirement

 

There are several compliances that must be followed by restaurant and hospitality industries in India to ensure their legal compliance and smooth operation. Some of the important compliances are:

 

Food Safety and Standards Authority of India (FSSAI) Registration: Every restaurant or food business operator in India is required to obtain a license or registration from FSSAI. This is mandatory as per the Food Safety and Standards Act, 2006. FSSAI is responsible for ensuring the safety and quality of food products and regulates the food industry in India. The registration process includes filling out an online application form and submitting the required documents.

 

Goods and Services Tax (GST) Registration: Every restaurant and hospitality business that has an annual turnover of more than Rs. 20 lakhs must register for GST. GST is a value-added tax that is levied on goods and services sold in India. The registration process involves obtaining a GSTIN (Goods and Services Tax Identification Number) and filing monthly or quarterly returns.

 

Shop and Establishment Act: The Shop and Establishment Act is a state-specific law that regulates the working conditions of employees in shops, commercial establishments, and other businesses. Every restaurant and hospitality business must comply with the Shop and Establishment Act of the respective state where it operates. This act regulates the working hours, leaves, holidays, and other terms and conditions of employment of employees.

 

Fire Safety: Fire safety compliances are mandatory for all restaurants and hospitality businesses in India. These include obtaining a No-Objection Certificate (NOC) from the local fire department, installing fire extinguishers, smoke detectors, and ensuring proper ventilation. Restaurants must also have clearly marked emergency exits and conduct regular fire safety drills.

 

Liquor License: A liquor license is required for any restaurant or hospitality business that serves alcohol. The license can be obtained from the Excise Department of the respective state. The process of obtaining a liquor license involves submitting an application form, paying the required fee, and fulfilling other conditions such as having a separate bar area, ensuring the age limit for serving alcohol, etc.

 

Health and Safety: The restaurant and hospitality businesses must comply with the health and safety standards set by the local health department. This includes regular cleaning and maintenance of the premises, proper sanitation, and hygiene. Restaurants must also ensure the safe storage and handling of food products, use of clean water and cooking gas, and pest control measures.

 

Labour Laws: All restaurants and hospitality businesses must comply with the various labour laws such as the Minimum Wages Act, Workmen's Compensation Act, and the Industrial Disputes Act. These laws regulate the terms and conditions of employment of employees, including wages, working hours, and benefits. It is essential for restaurants and hospitality businesses to follow these laws to avoid legal troubles and ensure the well-being of their employees.

 

Collaborating with Experts: How CAs, CSs, Cost Accountants, Advocates, and Other Professionals Assist Restaurant and Hospitality Businesses in India

 

Role of Chartered Accountants (CAs):

 

CAs are financial experts who play a vital role in the financial management of restaurant and hospitality businesses. Some of their roles include:

 

1. Accounting and Bookkeeping: CAs help restaurant and hospitality businesses maintain proper financial records and prepare financial statements.
2. Tax Compliance: CAs assist in tax compliance and ensure that the business is adhering to various tax laws, such as GST, income tax, and others.
3. Auditing: CAs can perform internal and external audits to ensure that the business is following financial regulations and standards.
4. Financial Planning: CAs assist in financial planning, budgeting, and forecasting to help restaurant and hospitality businesses make informed decisions regarding their financial operations.

 

Role of Company Secretaries (CSs):

 

CSs are legal experts who help businesses in fulfilling their legal and regulatory requirements. Some of their roles in the restaurant and hospitality industry include:

 

1. Legal Compliance: CSs ensure that the restaurant and hospitality businesses comply with various legal requirements, such as the Companies Act, Food Safety and Standards Act, and other applicable laws.
2. Corporate Governance: CSs help businesses in adhering to corporate governance norms and ensure that the company is being run ethically and efficiently.
3. Secretarial Compliance: CSs assist in maintaining records, preparing agendas, and minutes of board meetings and ensuring that the company's records are updated and maintained as per the regulatory requirements.
4. Liaisoning: CSs act as a liaison between the business and various regulatory authorities such as the Registrar of Companies, Ministry of Corporate Affairs, and others.

 

Role of Cost Accountants:

 

Cost accountants are experts in cost management and play a vital role in the financial management of restaurant and hospitality businesses. Some of their roles include:

 

1. Cost Management: Cost accountants help businesses in managing costs, analyzing cost structures, and identifying areas for cost savings.
2. Cost Audit: Cost accountants can perform cost audits to ensure that the business is following cost accounting standards and regulations.
3. Pricing: Cost accountants assist in pricing strategies to ensure that the business is offering competitive prices while maintaining profitability.
4. Budgeting: Cost accountants help in preparing budgets and cost estimates to facilitate efficient financial planning.

 

Role of Advocates:

 

Advocates are legal experts who can provide legal guidance and representation to businesses. Some of their roles in the restaurant and hospitality industry include:

 

1. Legal Compliance: Advocates can assist in ensuring that the business is complying with various legal requirements, such as labor laws, consumer protection laws, and others.
2. Contracts and Agreements: Advocates can help in drafting contracts and agreements, such as lease agreements, vendor contracts, and employment agreements, among others.
3. Dispute Resolution: Advocates can represent the business in legal disputes and provide legal guidance to resolve disputes amicably.
4. Intellectual Property Protection: Advocates can assist in protecting the business's intellectual property, such as trademarks and copyrights.

 

Role of Other Professionals:

 

Apart from CAs, CSs, cost accountants, and advocates, other professionals who can assist restaurants and hospitality businesses include:

 

Food Safety Experts: Food safety experts can assist in ensuring compliance with food safety and hygiene standards.

Human Resource Consultants: HR consultants can assist in ensuring compliance with labor laws, employee training, and development.

Insurance Consultants: Insurance consultants can assist in selecting and procuring insurance policies to protect the business from risks.

 

In conclusion, engaging the services of professionals, such as CAs, CSs, cost accountants, advocates, and other experts, can be highly beneficial for restaurant and hospitality businesses to comply with legal requirements, manage finances efficiently, and mitigate risks.

 

 

Article Compiled by:-

Mayank Garg

(LegalMantra.net Team)

+91 9582627751

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including newspapers, Journals, Bare Acts, Case Material. Charted Secretary etc.

Print