Hyderabad Restaurants Booked For Charging Beverages Above MRP: Which Law Did They Break?
In an interesting case observed in Hyderabad, four restaurants were booked by Legal Metrology Department, because they were charging water bottles above the MRP, and levying GST on the inflated rate.
Which law did they actually break?
Restaurants Booked For Overcharging Water Bottles
Based on a complaint from a local social activist, four restaurants in Hyderabad were booked by Legal Metrology Department.
The restaurants are: ‘Pista House Restaurant’, Nizampet; ‘Sangeetha A Lounge Restaurant & Bar’, ‘Chaitanya Bar & Family Restaurant’, Kukatpally; and ‘Hotel Kuchipudi Palav Restaurant’, Miyapur.
The complaint was filed after these restaurants charged customers for water bottles, which was beyond the MRP, and also charged GST on that.
While Pista House Restaurant charged a 300 ml cold drink for Rs 40, whose MRP was Rs 25, ‘Sangeetha A Lounge’ charged a soda bottle for Rs 30, whose actual MRP was Rs 12.
Hotel Kuchipudi Palav Restaurant was charging a 250 ml cold drink bottle for Rs 35, whose MRP was Rs 25.
Besides charging over and beyond the MRP, these restaurants also charged GST on the inflated amount.
Legal Metrology Department booked these restaurants under Section 12 (2) and 6 (1) of the Legal Metrology Act.
In May this year, Legal Metrology Department from Hyderabad had booked a restaurant for charging service fee.
But Supreme Court has Allowed Overcharging?
In 2017, and then again in 2018, Supreme Court allowed restaurants and hotels to charge water bottles and other beverages above the MRP. The reason was that, these establishments are providing a service, and the pricing issue cannot be governed by Legal Metrology Act.
However, there is clause which states that if any restaurant or hotel wants to charge above MRP for a product, then it should have clear label and the customer should be informed.
Mr Teja, the activist who filed these complaints against Hyderabad restaurants said, “Many of these restaurant owners trying to traverse the law by citing the Supreme Court ruling which allows them to sell water/aerated drinks over MRP. However, the ruling also said that in that case, the bottle should clearly indicate that it is ‘not for retail sale’. These could not be used for commercial or trade purposes.”
Upto Rs 25,000 penaly can be imposed on these restaurants now. Rs 50,000 penalty is for repeated offense.
As per Consumer Protection Rules, no brand or business can charge for any product beyond MRP, however, as ruled by Supreme Court, there can be some exceptions, provided the terms are met.
Interestingly, Govt. may soon abolish the practice of MRP, and allow the retailer to determine the price of a product, and not the manufacturer.
We will keep you updated, as more details come in.