Govt. Will Jail Hotel Owners Who Sell Water Bottle Above MRP!

The chaos over MRP or Maximum Retail Price is refusing to subside.

A day after Govt. relaxed MRP rules for single brand outlets, and allowed them to put a price tag based on their wishes, a recent affidavit from Govt. means serious trouble for restaurant and hotel owners.

In case related to MRP of pre-packaged goods sold in restaurants, hotels, Govt. of India has informed the Supreme Court that if anyone is found selling mineral water bottle above MRP, he or she can be jailed, besides imposing serious penalty.

How will the hotel industry respond now?

We try to read between the lines here..

Govt. to Hotels: Sell Water Bottle Above MRP And Get Jailed!

In response to a petition filed by Federation of Hotel and Restaurant Associations of India (FHRAI) in the Supreme Court, Govt. has informed that selling water bottles or any commodity above MRP is an economic offence, and the punishment can result in jail as well.

Govt. explained the logic, by stating that selling water bottles above MRP is also a case of tax-evasion, besides breaking consumer laws of MRP.

In their affidavit, Govt. said,

“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.,”

In their affidavit, Ministry of Consumer Affairs has referenced Section 36 of Legal Metrology Act, according to which selling any pre-packaged good above MRP will lead to penalty of Rs 25,000 for the first offense; Rs 50,000 penalty for second offense, and subsequently, Rs 1 lakh fine and/or jail for a year for further offenses.

A Kerala High Court order had allowed restaurants to over-charge few products, due to the value-addons provided by them, in terms of ambiance, AC environment etc.

However, a Delhi HC order overruled this order, and allowed the Govt. to flex their muscles and take action against restaurants, which overcharge customers for pre-packaged products such as water bottles.

The recent petition in Supreme Court has been filed by Federation of Hotel and Restaurant Associations of India (FHRAI) against this order.

Justice Rohinton F Nariman is heading a bench which will hear further arguments in this matter.

Confusion Related to MRP Rules?

Just a day before, Govt. had exempted single brand retailers from the MRP rules, and had allowed them to place tags on the shelfs, rather than on each individual product, which means that these outlets can put different MRP on the same product, based on the location of the outlet.

If we apply the same MRP rule and logic as presented in the Supreme Court pertaining to FHRAI petition, then we find inconsistency here.

Last year, Ministry of Consumer Affairs had categorically stated that airports and malls cannot charge extra for water bottles, and we had presented a scenario wherein brands such as Bisleri, Aquafina etc supply a highly priced water bottle, with a different MRP, which will again result in over-charging customers for the same product.

On the other hand, reports have already emerged that Indian Govt. can abolish MRP system for ever, and allow the free market to place their own price tags, based on the market conditions.

For time-being, it is clear that no restaurant or hotel can charge you more than the MRP of a water bottle, and this is indeed a great news for the consumers.

But what about businesses who are into food and beverages?

Update: Supreme Court has ruled that hotels and restaurants can charge more for water bottles and other pre-packaged commodities. The case is still going on, and Govt. is expected to present further arguments related to the case. We will keep you updated, as we receive more inputs regarding the confusion over MRP.