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Big blow to consumers: Supreme Court allows restaurants to charge above MRP for bottled water

The government had also argued that overcharging for bottled water could help these establishments in tax evasion.

twitter-logo BusinessToday.in   New Delhi     Last Updated: February 18, 2018  | 10:34 IST
Big blow to consumers: Supreme Court allows restaurants to charge above MRP for bottled water

In a huge setback to restaurant-goers, Supreme Court said that hotels and restaurants can now charge more than the maximum retail price (MRP) for bottled water. The pricing of bottled water in hotels and restaurants has been the focus of intense debate since 2003. Soon after, the hoteliers' association, Federation of Hotel and Restaurant Association of India, approached the Delhi High Court challenging penal provisions of the law, after which in 2007 the a single judge bench held that hotels and restaurants can sell bottled water above the MRP while serving customers.

The Supreme Court rejected the Centre's argument and said that hotels and restaurants can overcharge for bottled water because there is an element of service in it. The bench headed by Justice Rohinton Nariman said that the provisions of the law cannot be applied to these establishments and they cannot be prosecuted for selling said items above MRP.  The bench observed that this is not a simple sale and nobody goes to a restaurant to simply buy a bottle of water.
 
Reports emerged as recently as yesterday that the government argued that overcharging for bottled water could fetch managements of hotels and restaurants a penalty of Rs 25,000 for first offence, and even jail term. Defaulters would be penalised Rs 50,000 for the second offence, media reports had said.

According to reports, the government mentioned in its affidavit that overcharging for pre-packed products was an offence under the Legal Metrology Act. The government had also argued that overcharging for bottled water could help these establishments in tax evasion. The Federation of Hotel and Restaurant Association of India had argued that charging in excess of MRP for bottled water during the service does not violate the provisions of the Standards of Weights and Measures Act/the Packaged Commodities Rules or the Legal Metrology Act of 2010.
 
In October 2015, the Supreme Court had sought the government's response on an appeal filed by the hoteliers' association seeking to set aside the division bench of Delhi High Court's February 2015 ruling that allowed the Centre to initiate prosecution against hotels and restaurants for overcharging for bottled water.

 

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