Factory License Dilemma: Are We Really Liable for Late Fees Before Approval?

Dear Seniors, The factory inspector visited our company and asked us to apply for a factory license. We were operating under a license from Shops & Establishments. Immediately, we applied for it, and it is in process. I am yet to get the license. After the plans were approved, we were told to pay fees. The inspector levied fees for the current year, Rs. 18,000, and also charged 100% late fees. For the next year, 2017, he charged fees of Rs. 18,000 (as per the schedule of payment of fees) and also late fees of Rs. 18,000. The coverage began on 1/01/2016.

My question is, are we supposed to pay late fees for the current year, and also without getting a license to date, are we supposed to pay late fees for next year? (Plans were approved in November 2016) Please advise.

Imposition of Late Fees in Factory Licensing

Please note that the imposition of late fees is specified in the factories' rules of the concerned state. In most northern states, the late fee is 25%. Also, please note that the same rate of late fee is applicable even for a one-day delay. If the late fee is 100% in your state, it is rightly charged even without obtaining the license. The inspector is empowered to prosecute you in a court of law for running your factory/establishment without obtaining a valid license, where provisions of a fine up to Rs. 1.00 Lakh and imprisonment up to 6 months are applicable.

The validity of the license is granted from January 1st to December 31st, but its renewal falls due by October.

Regards, P. K. Sharma

Dear Laxman, you haven't mentioned the type of establishment in respect of which the query is raised. The Factory Act, 1948, is a Central Act, and all the States have been empowered to make their own rules suiting their requirements. In normal conditions, the factory means:

1. Where ten or more workers are employed during the preceding twelve months, and the manufacturing process is carried out with the aid of power, or
2. Where twenty or more workers are employed during the preceding twelve months, and the manufacturing process is carried out with or without the aid of power.

Based on the above parameters, you can calculate the license fee, which is based on the number of persons employed and the maximum quantity of horsepower (HP) installed in your establishment. I believe that your query relates to the State of Goa. Rs. 1800/- has been fixed for the factory where 500 to 1000 persons are employed with the installation of 10 horsepower used. I agree with Sh. Sharma that the late fee is specified in the Factories rules of the State concerned. In most of the Northern States, the late fee is 25% of the License Fee. Therefore, you need to check the Goa factory Rules. If the Act is not made applicable to your factory due to ignorance, then there is no point in agitating the issue because prosecution for non-compliance with the statutory provisions is much more expensive and bothersome.

Response to Your Query

1. As regards the late fine for the current year, the license can be renewed only on payment of the late fee as the same was due in October 2016 (Please check the State Factory Rules).

2. Once you have applied for the renewal, you are absolved of the responsibility of compliance. The license issued under the Act remains valid from January to December of the year.

Hope the above clarifies your doubts.

Regards, BS Kalsi

Dear members,

Please read 18000/- in place of Rs. 1800/-, which has been mentioned erroneously. Sorry for the inconvenience caused, if any.

BS Kalsi
Member Since August 2011