The Supreme Court on Tuesday directed that hotels and restaurants are not bound by the maximum retail price (MRP) when they sell bottled mineral water within their premises.
A bench led by Justice Rohinton Nariman held that the provisions of Legal Metrology Act will not be applicable to hotels and restaurants for selling bottled water above MRP, and no prosecution can be launched against them.
The top court turned down the Centre’s argument that overcharging for pre-packed products was an offence under the Legal Metrology Act, attracting a fine of Rs 25,000 or a jail term.
The court noted that hotels and restaurants come with composite elements of sale and service where consumers enjoy ambience, cutlery etc.
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 of pre-packed products was an offence under the Legal Metrology Act.
“Sale of packaged water over the 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 ,” the ministry said in the affidavit.
The Delhi High Court in 2007 had ruled that hotels and restaurants in the capital cannot sell bottled mineral water over and above the MRP to customers, who visit them and enjoy their other services and facilities.