SC says hotels can charge higher than MRP for bottled water

The Supreme Court has allowed hotels and restaurants to charge its customers more than the maximum retail price (MRP) stamped on packaged water, holding that provisions of Legal Metrology Act will not apply to hotels and restaurants and they cannot be prosecuted for selling products above MRP.

The court held that hotels and restaurants are not bound by the maximum retail price when they sell bottled mineral water and packaged food items and rejected the government's argument that overcharging for pre-packed or packaged products was an offence under the Legal Metrology Act

An offence under the Legal Metrology Act can attract a fine of Rs25,000 or a jail term. Section 36 of Legal Metrology Act states that anyone involved in the sale, distribution or delivery of any pre-packaged commodity that does not conform to the declarations on the package is punishable by law with a fine of up to Rs25,000 for the first offence. The fine for the second offence can go up to Rs50,000. Further, subsequent offences will be penalised with fines up to Rs1 lakh, or one-year imprisonment, or both.

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.

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 etc.,'' the government had said.

The sale of bottled drinking water above the MRP and the different prices charged for packaged water in different places have been a subject of intense debate since 2003 when the hoteliers' association approached the Delhi High Court challenging penal provisions of the law.

The high court ruled in 2007 that Delhi's hotels and restaurants cannot sell bottled mineral water above the MRP.

There have also been complaints about companies printing prices higher than the MRPs at places like hotels and airports. The Ministry has demanded justification from such companies for their offences. ''Mineral water bottle will be available at the same rate at airports, hotels and malls,'' consumer affairs minister Ram Vilas Paswan had tweeted in response to complaints and had directed standardisation of selling price of bottled water across airports, hotels, malls, and other retail outlets.