Practice: Module I
Chapter Twelve
Syllabus topic 1, 2, 3, "Registration procedure as required under The Food Safety and Standards Act, 2006."; "Registration Procedure of Importer Exporter Code under The Foreign Trade (Development and Regulation) Act, 1992."; "Registration procedure of Partnership firms under The Partnership Act, 1932."
Pages 26 to 30 of 62
How this set is built
30 marks in one hour, any 2 of 3 questions of 15 marks, subdivisible 8+7, 10+5 or 5+5+5, with more importance to the practical problems wherever possible.
Work each question before reading the answer.
Question 1 (15 marks: 8 + 7)
(a) [8] Sagar Foods is a partnership firm of two partners which will manufacture and pack ready-to-eat snacks in Pune. Expected annual turnover Rs. 90 lakh, production capacity 400 kg a day. It intends to sell in Maharashtra and Gujarat, and to import a flavouring ingredient from Thailand. Advise on its obligations under the Food Safety and Standards Act 2006 and under the Foreign Trade (Development and Regulation) Act 1992.
(b) [7] Explain section 69 of the Indian Partnership Act 1932, and state whether registration of a firm is compulsory.
Answer to 1(a)
Under the Food Safety and Standards Act 2006.
It is a food business operator. Manufacturing and packing food is a food business within section 3(1)(n), and the firm carries it on, so it is the operator under section 3(1)(o).
It cannot register as a petty food business operator. Regulation 1.2.1(4) sets the limits at an annual turnover not exceeding Rs. 12 lakh and a production capacity not exceeding 100 kg a day. Rs. 90 lakh and 400 kg a day are outside both.
So it must take a licence under section 31(1), which forbids commencing or carrying on any food business except under a licence.
And it must be a Central licence, on two independent grounds.
| Ground | Schedule 1 class |
|---|---|
| It will import a food ingredient for commercial use | Class VII, all importers importing food items including food ingredients and additives for commercial use |
| It will operate in two States | Class IX, food business operators operating in two or more States, if it sets up a place of business in Gujarat |
Class IX needs care. Selling into Gujarat from a Pune unit is not by itself operating in two States; the class bites when the firm has a food business establishment in the second State. Class VII catches it in any event, because of the import.
The application is in Form B on the FoSCoS portal, to the Central Licensing Authority, with the layout plan, the list of equipment, the water analysis report, the food safety management plan and the other Schedule 2 documents, and the fee under Schedule 3.
If nothing is heard for two months, the proviso to section 31(4) allows the firm to start, and the Designated Officer may then only issue an improvement notice under section 32.
Under the Foreign Trade (Development and Regulation) Act 1992.
Section 7 forbids any person from making any import or export except under an Importer-Exporter Code granted by the Director General. The firm intends to import, so it needs one before the consignment arrives.
Practice: Module I
The Code is the firm's PAN, applied for on the DGFT portal in ANF 2A with the PAN, proof of the entity, address proof and a cancelled cheque, and it must be updated every year between April and June or it is deactivated.
The order. The Code and the licence are independent, but the licence must be in place before the food business commences and the Code before the consignment is shipped.
Answer to 1(b)
Registration is not compulsory under the Act. There is no provision requiring it, and section 58 provides that registration "may be effected at any time". There is no time limit and no penalty for not registering.
What the Act does instead is disable an unregistered firm, in section 69.
Section 69(1). No suit to enforce a right arising from a contract or conferred by the Act may be instituted by a person suing as a partner against the firm or a co-partner, unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner.
Section 69(2). No suit to enforce a right arising from a contract may be instituted by or on behalf of a firm against a third party, on the same two conditions.
Section 69(3). The bar applies also to a claim of set-off, but does not affect the right to sue for dissolution, for accounts of a dissolved firm, or to realise the property of a dissolved firm, and does not affect the insolvency machinery.
Section 69(4). The section does not apply to a firm with no place of business in the territories to which the Act extends, or in an excluded area, or to a claim not exceeding one hundred rupees.
What survives. The firm may still be sued; it may sue for dissolution and accounts; and it may sue on a right not arising from a contract, such as in tort.
Conclusion. Registration is optional in law and unavoidable in practice: a firm that gives credit and cannot sue for the price has no remedy at all, so any firm intending to trade should register before it does.
Question 2 (15 marks: 10 + 5)
(a) [10] Set out the procedure for registering a partnership firm under the Indian Partnership Act 1932, naming the sections.
(b) [5] Distinguish between registration and licensing under the Food Safety and Standards Act 2006.
Answer to 2(a)
Step 1. The statement, under section 58(1). It is sent by post or delivered to the Registrar of the area in which any place of business of the firm is situated or is proposed to be situated, in the prescribed form and with the prescribed fee, stating:
Practice: Module I
| Particular | |
|---|---|
| (a) | The firm name |
| (b) | The place or principal place of business |
| (c) | The names of any other places where the firm carries on business |
| (d) | The date when each partner joined the firm |
| (e) | The names in full and permanent addresses of the partners |
| (f) | The duration of the firm |
Step 2. Signature, under section 58(1). The statement is signed by all the partners, or by their agents specially authorised in that behalf.
Step 3. Verification, under section 58(2). Each person signing verifies it in the manner prescribed.
Step 4. The firm name, under section 58(3). It must not contain "Crown", "Emperor", "Empress", "Empire", "Imperial", "King", "Queen" or "Royal", or words expressing or implying the sanction, approval or patronage of Government, except with the State Government's written consent.
Step 5. Registration, under section 59. Where the Registrar is satisfied that section 58 has been complied with, he shall record an entry of the statement in the Register of Firms and file the statement. The function is ministerial.
Step 6. Keeping the entry current. Section 60 for an alteration in the firm name or the principal place of business; section 61 for closing and opening branches; section 62 for changes in the names and addresses of partners; section 63 for changes in the constitution and for dissolution; and section 64 for rectification of mistakes.
Documents in practice. Form A, the stamped partnership deed, an affidavit, the PAN and address proof of each partner, proof of the place of business, and the fee. In Maharashtra the application is made online to the Registrar of Firms.
And section 70 punishes any person who signs a statement under this Chapter which he knows or believes to be false.
Answer to 2(b)
| Registration | Licence | |
|---|---|---|
| Provision | Section 31(2) and Regulation 2.1.1 | Section 31(1) and Regulation 2.1.2 |
| Who | Petty food business operators: a petty manufacturer selling his own food, a petty retailer, hawker, itinerant vendor, temporary stall holder, and small scale, cottage or tiny food businesses | Everybody else |
| The limits | Annual turnover not exceeding Rs. 12 lakh, and or capacity not exceeding 100 kg or litres a day, 500 litres of milk a day, or 2 large animals, 10 small animals or 50 poultry birds a day | Above them |
| Form | Form A | Form B |
| Granted by | The Registering Authority, which may be an official of the local body | The Designated Officer appointed under section 36(1), State or Central |
| Which authority | One tier only | Central for the ten classes in Schedule 1; State for the rest |
| Documents | Short: photograph, identity, premises proof and a self-attested hygiene declaration | Long: layout plan, equipment list, water analysis, food safety management plan and more |
| Fee | Lower | Higher |
Practice: Module I
Both produce a fourteen-digit number that must be displayed at the premises and printed on the label of packaged food. A business that grows past the petty limits must move up to a licence, and continuing on a registration is carrying on a food business without a licence, which section 31(1) forbids.
Question 3 (15 marks: 5 + 5 + 5)
(a) [5] State the three grounds on which an Importer-Exporter Code may be suspended or cancelled, and the safeguards the Act gives.
(b) [5] Explain the deemed approval in section 31(4) of the Food Safety and Standards Act 2006.
(c) [5] "An Importer-Exporter Code is now the PAN." Explain, and state one duty of the holder that is commonly forgotten.
Answer to 3(a)
Section 8(1) of the Foreign Trade (Development and Regulation) Act 1992 names three grounds.
(a) Contravention. The person has contravened this Act, or any rule or order under it, or the foreign trade policy, or any law relating to Central excise, customs or foreign exchange, or has committed any other economic offence under any law the Central Government notifies.
(b) Reason to believe as to conduct. The Director General or an authorised officer has reason to believe that the person has made an export or import in a manner prejudicial to the trade relations of India with any foreign country, or to the interests of other persons engaged in imports or exports, or has brought disrepute to the credit or the goods of, or services or technology provided from, the country.
(c) Specified goods, services or technology imported or exported in contravention of the Act, the rules, the orders or the policy.
The safeguards, all four in the same sub-section:
- The officer may call for the record or any other information.
- He must give notice in writing informing the person of the grounds on which suspension or cancellation is proposed.
- He must give a reasonable opportunity of making a representation in writing within a reasonable time stated in the notice.
- If the person so desires, of being heard.
Only then may the Code be suspended for a period or cancelled. The remedies afterwards are the appeal in section 15 and the review in section 16, and the review may be taken by the authority on its own motion.
Answer to 3(b)
The proviso to section 31(4):
Provided that if a licence is not issued within two months from the date of making the application or his application is not rejected, the applicant may start his food business after expiry of the said period and in such a case, the Designated Officer shall not refuse to issue a licence but may, if he considers necessary, issue an improvement notice, under section 32 and follow procedures in that regard.
Practice: Module I
Three conditions must be satisfied. An application has been made; two months have expired from the date of making it; and the application has not been rejected.
The effect. The applicant may start his food business, and the Designated Officer shall not refuse to issue the licence.
What the Officer keeps. He may, if he considers it necessary, issue an improvement notice under section 32, specifying the failure, the measures to be taken and the time, and follow the procedure in that regard.
Why it exists. It protects an applicant against administrative delay without giving up the Department's grip on food standards. It is not itself a licence, and a candidate should say so: it is a permission to trade while the licence is produced.
Answer to 3(c)
Since 2017 the Importer-Exporter Code has been merged with the Permanent Account Number, so an entity's Code is its PAN, and the Director General of Foreign Trade issues a certificate rather than a separate ten-digit number.
Two consequences follow.
One PAN, one Code. An entity cannot hold more than one Code, because it cannot hold more than one PAN under section 262(8) of the Income-tax Act 2025. Old duplicate codes were surrendered against the PAN.
The Code is permanent and covers everything. It does not expire, and one Code serves all the entity's branches, divisions, units and factories.
The duty commonly forgotten. The Code must be updated on the DGFT portal once every year, between April and June, even if nothing has changed. A Code that is not updated is deactivated, and a deactivated Code stops a consignment at the port as surely as no Code at all. It can be reactivated on updation without penalty, but the shipment has already been delayed and the demurrage already incurred.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.