In a major decision, the Supreme Court on Tuesday ruled that hotels and restaurants could sell bottled drinking water and packaged food above the maximum retail price (MRP).
The SC was hearing a petition by the Federation of Hotel and Restaurant Associations of India (FHRAI).
“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 said.
The court ruled that provisions of the Legal Metrology Act would not apply to hotels and restaurants, which means that the outlets could not be prosecuted for selling items above the MRP.
The Ministry of Consumer Affairs (MCA), which had filed an affidavit in court, against the move.
“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,” Hindustan Times quoted the affidavit as stating.
The MCA also said that overcharging for pre-packed products was an offence under Section 36 of the Legal Metrology Act, which states that “anyone caught selling, distributing or delivering any pre-packaged commodity that does not conform to the declarations on the package shall be punished with fine up to Rs 25,000 for the first offence. It can increase to Rs 50,000 for second offence and subsequent offences can attract a fine of up to Rs 1 lakh or imprisonment for one year or both.”
In March this year, Union Consumer Affairs Minister Ram Vilas Paswan ruled out the possibility of a separate law to regulate the sale of packed products above the MRP.
"As per the existing Act, there can be only one MRP, be it inside a mall or outside. It is strong enough. There is no need to have another legislation," Paswan said.
"No private companies can sell any product at two different MRPs. Double MRP is a crime. There is provision to deal with it strongly. (However) MRPs are declared by private companies. (So) We do not know if their MRP and actual production cost has huge difference," he added.