New Delhi: The Supreme Court on Tuesday held that hotels and restaurants are not bound by the maximum retail price (MRP) when they sell bottled mineral water.
A bench led by Justice Rohinton F Nariman held that provisions of Legal Metrology Act will not be applicable in selling bottled water in hotels and restaurants and therefore, no prosecution can be launched against them for selling above MRP.
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.
“It is not a case of simple sale. Nobody goes to hotel to buy or take away a bottle of mineral water," observed the bench.
It rejected the government’s argument that even a sale in hotels would require mandatory compliance with the provision of the Act and that there would be jail term and fine for selling above MRP.
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.
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