Are Restaurant owners supposed to file return under Food Safety and Standards Act, 2006?
- In the month of June, it was widely reported in the media that traders, restaurant owners and distributors were exempted from filing annual return prescribed under Regulation 2.1.13 of Food Safety & Standards (Licensing & Registration of Food Business) Regulations, 2011 (hereinafter referred as Licensing and registration regulation). It was reported to have been done after the meeting of the then Union agriculture minister Mr. Sharad Pawar with FSSAI officials following which the food regulators decided to make certain amendments to resolve the issue.1 The respective amendment came on 10th June, 2014.
- In this article, the author2 is analyzing the effect of the amendment carried out by the FSSAI and whether the conclusion that restaurant owners are not required to file the annual return is correct or not.
- First of all, let us have a look at the relevant provision of the Licensing and registration regulation as it existed prior to amendment which is reproduced below:-
(1) Every licensee shall on or before 31st May of each year, submit a return electronically or in physical form as may be prescribed by the concerned Food Safety Commissioner in Form D-1 provided in Schedule 2 of these Regulations to the Licensing Authority in respect of each class of food products handled by him during the previous financial year.
PROVIDED however that every licensee engaged in manufacturing of milk and/or milk products shall file half yearly returns for the periods 1st April to 30th September and 1st October to 31st March of every financial year in the Form D-2, as provided in Schedule-2 of these Regulations. Such returns will be filed within a month from the end of the period.
(2) A separate return shall be filed for every license issued under the Regulations, irrespective of whether the same Food Business Operator holds more than one license.
(3) Any delay in filing return beyond 31st May of each year shall attract a penalty of Rs. 100 per day of delay.”
- The perusal of the aforementioned Regulation clearly shows that every licensee has to file an annual return. A licensee is the person who hold license under Licensing and registration regulation for various activities related to food or food ingredients like manufacturing, processing, packing, storage, transportation, import, sale etc. So the coverage of the word “licensee” was very wide.
- Pursuant to the representation made by the then Union minister and the traders, the aforementioned regulation was amended vide Notification dated 10th June, 2014. The amending notification, inter alia, substituted the word “licensee” with “manufacturer and importer who has been issued a license”. This leads us to find out the meaning of the term “manufacture” and ‘manufacturer’ which has been defined under section 3(zc) and 3(zd) of the Food Safety & Standards Act, 2006 respectively and which are reproduced below:-
“’manufacturer’ means a person engaged in the business of manufacturing any article of food for sale and includes any person who obtains such article from another person and packs and labels it for sale or only labels it for such purposes”
“’manufacture’ means a process or adoption or any treatment for conversion of ingredients into an article of food, which includes any sub-process, incidental or ancillary to manufacture of an article of food”
- The perusal of the aforementioned definitions read with the amended regulation 2.1.13 clearly suggests that a person engaged in conversion of food ingredients into food article for sale would get covered under the definition of manufacturer and thus would have to file annual return under Licensing and registration regulation. Now, I think there should not be any doubt over the fact restaurant indeed coverts food ingredients into food articles and are thus are liable to file returns. For those who are still doubtful about it let me clear their doubt by referring to the definition of ‘ingredient’ and ‘food’ given under 3(y) & 3(j) the Food Safety and Standards Act, 2006 respectively.
“‘Ingredient’ means any substance, including a food additive used in the manufacture or preparation of food and present in the final product, possibly in modified form”
“‘food’ means any substance, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food to the extent defined in clause (zk), genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water used into the food during its manufacture, preparation or treatment but does not include any animal feed, live animals unless they are prepared or processed for placing on the market for human consumption, plants prior to harvesting, drugs and medicinal products, cosmetics, narcotic or psychotropic substances:”
- From the aforementioned definitions, it becomes crystal clear that ‘ingredient’ can be any substance used in manufacture of ‘food’ and ‘food’ can also be any substance which is intended for human consumption. Now, if a restaurant prepares a food item say ‘palak paneer’ for its customer, it would do so with the help of different ‘ingredients’ like palak, paneer, oil, spices etc. This example shows that the restaurant actually converts ingredient into a food article and are thus covered under the definition of ‘manufacturer’. Consequently, they are obligated to file annual return under Regulation 2.1.13 of the Licensing and Registration Regulation.
- Now, the question arises as to how the impression reached that the restaurant owners are not suppose to file returns. Was it on the basis of the discussion with the then Union minister and subsequent to the discussion FSSAI changed its mind while carrying out the amendment. If that was the case then FSSAI should have also come out with a clarification stating the actual position especially in the light of the fact that it was widely reported in the media. It is very much possible that depending upon the media report, many licensed restaurant owners might not have filed the returns and may anytime be served letters for imposition of penalty. In the light of above discussed confusion, the FSSAI may not be very strict in imposition of penalty but there is no doubt this misunderstanding leaves the restaurant owners vulnerable for exploitation.