India. Charging in excess of MRP for alcohol or beer not an offence: Kerala HC

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Charging in excess of maximum retail price (MRP) for alcohol or beer served in a licenced hotel is not an offence in violation of legal metrology law, the Kerala High Court has held.

The ruling was given by justice Raja Vijayarghavan V after considering a petition filed by Beach Road, Kannur-based Hotel Savoy Bar through advocate Sumathy Dandapani.

A senior inspector of legal metrology department had conducted an inspection at Hotel Savoy Bar at Kozhikode on November 22, 2011 and it was found that Rs85 was charged for a beer instead of the MRP of Rs55. A case was registered against the hotel and its proprietors violating provisions of Legal Metrology Act of 2009 (section 18) and Legal Metrology (Packaged Commodities) Rules, 2011 (Rule 18.2)

Petitioner’s counsel argued that terms of the licence granted by excise department clearly prohibits retail sale of liquor and that serving food and alcohol in the bar hotel’s premises cannot be considered as a retail sale. Guests are provided with various amenities including comfortable seating, climate conditioning, bearers at his beck and call, music, snacks, etc. The hotel charges for the whole service, which is inclusive of the amenities provided, and it cannot be categorized as a retail sale, the counsel submitted.

Opposing this, public prosecutor Baby Thomas submitted that the petitioner has admitted to selling beer in excess of MRP and the allegations in the complaint prima facie make out a case.

Ruling in favour of the petitioner, the court said in the judgment, “The privilege as per the FL3 (bar) licence issued extends to the sale of foreign liquor for consumption within a room specifically approved for the purpose. The licence specifically stipulates that no liquor shall be sold for removal outside the hotel to anyone including residents of the hotel.”

The transaction that takes place in the hotel or restaurant is service that includes serving alcohol or meals or both. The amenities provided to the customer is regarded as essential even as per the express terms of the FL3 licence issued by the excise department, the court said.

“The bill prepared by the petitioner is one and indivisible, not being capable by approximation of being split up into one for food and the other for alcohol or for the amenities provided to the customer. The said Bill would be prepared after consideration of the costs of alcohol as well but that would include the cost of all the other amenities given to the customer. The value-added services like the comforts of the restaurant such as climate conditioning, comfortable seating, snacks, service of bearer, toilet, drinking water, chilling of the alcohol etc., and also the meals, are part and parcel of service which is in reality the transaction between the parties,” the court held while quashing the case against the hotelier.