There are many shops near your house, but you are buying your necessary products from a local shop, without going to other shops. There may be a question why are you doing this?
The reason is the price of the products. It is human instinct that they try to find the store that offers the best product at the lowest price. We often buy packets of chips, but have we ever turned the packet over and seen the price stamped on the back or bottom of the package? The price stamped on the back or bottom of the package is its MRP.
What is MRP?
MRP, or Maximum Retail Price, is the price of a product calculated by a manufacturer. They usually set the maximum price at which a product can be sold. Some factors are maintained while calculating this price, including the cost of production, transportation, applicable taxes, and profit margins of wholesalers and retailers.
As per government norms, all packaged products must have MRP, and MRP cannot be exceeded in any way. But some retailers offer 10% to 15% discount on MRP to retain customers. Customers flock to the store where they get their essential products at a lower price.
Can a retail shop charge more than MRP?
But the problem appears when you buy things at higher prices than MRP. For emergency purposes, you may have to go to a shop where the shopkeeper is trying to sell bottles of cold drinks at an overpriced price on a hot day. If you ask, he gives reasons like transportation, refrigerator, and electricity cost.
But please note that charging more than MRP is illegal as per government rules. You need to know that transportation and refrigeration costs are included while calculating MRP. According to the Central Law of Metrology Act, the retailer has to pay a fine of ₹2,000 for violating the law. However, in some cases, MRP is exempt from this rule. Hotels and restaurants are covered under that exemption.
Can the hotel charge more than MRP on water bottles?
In 2017, the Supreme Court ruled that hotels and restaurants would be able to sell products such as bottled water, packaged food, etc., at higher prices than the MRP. This was because a restaurant or hotel is not a retailer; they provide additional services to the customer, such as ambiance and cutlery. That bench of the Supreme Court also decided that hotels and restaurants cannot be prosecuted for selling items above the MRP. The government publishes it in an affidavit in 2015 that charging more than MRP for pre-packaged products is a legal offense. But in 2017, a division bench of the Supreme Court removed the affidavit from the hotel or restaurant.
Can 5-star hotels charge more than MRP?
5 Star hotels can charge higher prices on bottled products and other beverages than the MRP. The high court of Kerala has said. It is not illegal for hotels to charge more than MRP on products. Justice B Roy said this over-pricing is justified because the customer enjoys the hotel’s ambiance. According to the Court, a hotel cannot act like a retailer or a shop. Customers don’t just go to hotels or restaurants to buy normal products. Along with buying these products, they also enjoy the service and ambiance of the hotel or restaurant. So their overprice is not illegal in any way.
Punishment for charging more than MRP?
Shopkeepers can charge more than the Maximum Retail Price or MRP. But many shopkeepers do not know that charging more than MRP is illegal and considered a violation of the law. According to the Packaged Commodities Rules, 2007, selling products above the MRP of 25 kg or 25 liters is illegal. Again the Legal Metrology Act approved in 2009 states that the printed MRP of a product is the maximum price that a consumer must pay to buy that product. A shopkeeper or retailer can sell goods below the MRP, but selling goods above it will attract fines and imprisonment. A fine of Rs. 2000 may be paid.
Can restaurants charge GST on mineral water?
An attractive amount is levied as GST on the sale of packaged drinking water or other packet products, including mineral water. When restaurants and hotels buy mineral water or other packaged goods, they must pay GST to the government. As a result they supply that GST to customers. So levying GST on mineral water, other packaged products, cold drinks, etc, is not illegal. The government levies GST at 18% on packaged drinking water.
Can a restaurant charge more than MRP for cold drinks?
In 2015, the government filed an affidavit that said it would be a legal offense for any shopkeeper to charge extra for pre-packaged goods. But in some cases, this judgment is suspended. Again in 2017, a bench of the Supreme Court ruled that it would not be reduced in the case of hotels and restaurants. They will be able to sell bottled water, packaged food, and cold drinks at higher prices than the MRP. They cite this because a restaurant or hotel cannot behave like a normal retail shop; when they sell this product, the customer enjoys additional services such as ambiance and cutlery. So the bench decided that this law of the Supreme Court would not apply to hotels and restaurants. They can sell items above the MRP, and no customer can sue them for it, or even if they do, it will not apply.
Do different countries or states have varying regulations regarding restaurants charging more than the MRP?
Although I have not traveled to many countries or I have no idea about the rules of all the countries of the world. But as far as I know, some countries are in favor of customers in this case, while some countries are in favor of hotels or restaurants. It means that in some countries, it is legal to charge more than MRP, and in others, it is not.
How can consumers identify if a restaurant overcharges for products compared to their MRP?
At some point, almost everyone purchases packaged water or some other packaged product from a retail store. Now almost everyone also knows what MRP is and the MRP of the products they buy. They can also identify whether the shopkeeper is selling products to them at higher or lower prices than the MRP. So when a restaurant or hotel sells a product at an overprice than MRP, most consumers can identify it. But everyone needs to know that it is not illegal.
Are there any common items or categories of products where restaurants tend to charge significantly more than the MRP?
Restaurants or hotels can charge significantly more than MRP for almost all packaged goods, packaged water, normal meals, desserts, snacks, etc. According to the judgment of the Supreme Court, it is not illegal in any way. They cited the reason that when customers go to a hotel or restaurant, they enjoy the ambiance, their service, etc., while buying these products, so they can charge more than the MRP.
So, as per the Supreme Court judgment, a hotel or restaurant can charge more than the MRP of a packaged mineral water bottle for serving you food, gifting you a candlelight dinner in a soothing ambiance, or pouring water into your glass, and you are obliged to give it. No way you can take any legal steps against them. The reason is so valid.