A Supreme Court bench, on Tuesday, said that hotels and restaurants can sell bottled water and packaged food higher than its maximum retail price (MRP).

The apex court said that it would not be considered an offence if a restaurant or a hotel overcharges for the packaged items or bottled water because they provide customers with service at the end of the day.

"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 Federation of Hotel and Restaurant Associations of India (FHRAI).

FYI: What is the fine for overcharging?

According to Legal Metrology Act, a fine of Rs 25,000 or a jail term can be rewarded to the concerned person.

According to a report in HT, 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.

WHERE DOES FHRAI STAND?

According to the Federation of Hotel and Restaurant Associations of India and hoteliers, government cannot prosecute business because they provide service, ambience and cutlery.

GOVERNMENT'S POINT OF VIEW:

The government is against SC's decision and has been fighting it since 2003. The Ministry of Consumer Affairs earlier filed an affidavit regarding the matter as well. The government thinks that it would end up in tax evasion and revenue loss.

According to Section 36 of Legal Metrology Act, "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."

Consumer Affairs Minister Ram Vilas Paswan in March 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."

In 2015, the government also filed an appeal to prosecute hotels and restaurants for overcharging, if needed.

As a result, in 2015, the hotel body moved the top court after the Delhi High Court had dismissed their review petition for charging higher than MRP.

The hoteliers' association and their lawyers stand their ground as they believe that government cannot punish businesses because they provide service to people.