The Supreme Court on Tuesday, December 12, allowed hotels and restaurants on Tuesday to sell bottled drinking water and packaged food at more than the maximum retail price (MRP) printed on these items.
The court rejected the government’s argument that overcharging for pre-packed or packaged products was an offence under the legal metrology act, which attracts a fine of Rs 25,000 or a jail term.
A bench headed by Justice Rohinton Nariman said the provisions of the law will not apply to hotels and restaurants, and these establishments cannot be prosecuted for selling such items above the MRP.
“It is not a case of simple sale. Nobody goes to a hotel to buy or take away a bottle of mineral water,” the bench observed, hearing a petition by the Hotels and Restaurant Association of India.
The court noted that composite elements of sale and service are there in hotels and restaurants where consumers also enjoy ambience, invested into by these commercial establishments. Advocate Sameer Parikh, appearing for the hoteliers’ association, said the law does not apply as selling packaged drinking water or food “involves a service element, including ambience, cutlery and service”.
Earlier, in its affidavit in response to a petition filed by the Federation of Hotel and Restaurant Associations of India (FHRAI), the Ministry of Consumer Affairs said that overcharging for pre-packed or prepackaged products was an offence under the Legal Metrology Act.
“Sale of packaged water over MRP by hotels and restaurants may have implications regarding tax evasion as a bottle purchased by a hotel at cost price, which should be sold at MRP or less, is being sold at much higher prices, leading to possible loss of additional revenue to the government in the form of service tax or excise duty,” it said.
The sale of bottled drinking water above the MRP has been a subject of intense debate since 2003 when the hoteliers’ association approached the Delhi high court challenging penal provisions of the law.
In March, the Centre had asked all establishments to comply with the law and sell packaged mineral water only at the maximum retail price.
The hoteliers’ association appealed again in the top court, which on Tuesday said the businesses cannot be prosecuted.
(Sources)
