Supreme Court allows hotels and restaurants to sell mineral water above MRP

The Supreme court on Tuesday, allowed the restaurants and hotels to sell bottled mineral water above the maximum retail price. A bench headed by Justice Rohinton Nariman rejected the Centre's argument and stated that when the hotels or restaurants sell packaged food or water, they also render certain additional services, hence it becomes a composite transaction for which they should not be compelled to sell such items at MRP. The Supreme Court was hearing an appeal filed by the Federation of Hotels and Restaurants Association of India (FHRAI) against the Union of India. The Centre told the court that the practice of overcharging mineral water is punishable under the Legal Metrology Act and is also a loss to the additional revenue of the government in the form of service tax. According to Section 36 of Legal Metrology Act, & quot selling, distributing or delivering any pre-packed commodity that does not conform to the declarations specified in the package shall be punishable with a fine of up to 25,000 for the first offence, which shall extend up to Rs 50,000 for the second offence and a fine up to Rs 1 Lakh or a jail term for 1 year for subsequent offence& quot . Hence, selling mineral water at a rate other than what is specified in the package is in contravention of this section and is therefore illegal. Advocate Sameer Parikh appearing for the federation said that the sale of packaged drinking water by the restaurants and hotels involves an additional service element-including ambience, cutlery and service. Hence, these entities not just charge for the mineral bottle but for the overall services provided to the customers. Turning down the government's contentions, the bench held that the restaurants and hotels selling packaged food and bottled water above MRP are not liable to be prosecuted under the Legal Metrology Act. & lsquo Nobody goes to such places to just buy a bottle of mineral water', it added. The legal battle between the Centre and federation began in 2003 when FHRAI approached the Delhi High Court challenging Section 36 of Legal Metrology Act. However, the High Court held that the restaurants and hotels cannot sell mineral water above the MRP. Aggrieved by the order of the High Court, the federation appealed to the Supreme Court. A single bench of the Supreme Court by setting aside the High Court's order ruled in favour of FHRAI. The government further appealed against this decision. A division bench of the Supreme Court allowed the Centre to prosecute the restaurants and hotels selling packaged water above MRP. In pursuance of this order, Centre issued a notification in March, asking all such establishments to comply with the law and not sell packaged mineral water above MRP. Hence, the Federation filed the present appeal in the apex court. The Supreme Court has now allowed the hotels and restaurants to sell mineral water bottles above MRP.