Serving of Foreign Liquor in licenced Hotel Bar not a retail sale, selling it over and above MRP not an offence: Kerala HC [Read Judgment]

The High Court of Kerala in M/s Hotel Savoy Bar vs. State of Kerala has held that the serving of Indian Made Foreign Liquor in a Hotel Bar licenced by the Excise authorities in the State of Kerala will not come within the definition of retail sale by a retail dealer and the act of selling the item over and above the retail sale price would not attract the vice of Rule 18 (2) of Legal Metrology (Packaged commodities) Rules, 2011 read with section 18 of the Legal Metrology Act, 2009.

Justice Raja Vijayaraghavan quashed the complaint against the Bar which allegedly charged excess price than the declared maximum retail price for the Beer supplied to the complainant.

During an inspection, it was revealed that the accused had charged a sum of Rs 85 /- instead of Rs.55/-, which was the MRP printed on the bottle of Beer in terms of Section 18 of the Legal Metrology Act, 2009. According to the complainant, charging excess price than the declared maximum retail price on the package attracts an offence under Rule 18(2) of The Legal Metrology (Packaged Commodities) Rules, 2011  read with S 18 of the Legal Metrology Act 2009 and punishable under section 32 (2) of the L.M.P.C. Rules.

The Court observed that the FL3 licence holder is entitled to procure the liquor only from the Government owned Corporations which has been issued an FL 9 licence for the purpose and the licence specifically stipulates that no liquor shall be sold for removal outside the hotel to anyone including residents of the hotel.

Referring to State of Himachal Pradesh and others V. Associated Hotels of India Ltd., the Court further observed transaction that takes place inside the hotel / Restaurant is one of service in the performance of which alcohol or meals or both are served as part of and incidental to that service to the customer, who may have been residing in the said hotel or one who had visited the hotel for having meal or alcohol. The order reads “The amenities provided to the customer is regarded as essential even as per the express terms of the FL3 licence issued to the petitioners by the Excise Department. 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 licence issued to the petitioner, prohibits the petitioner from carrying out retail sale of alcohol to the customer for the purpose of consumption outside the premises. The customer is prohibited from even taking away the unfinished items from the hotel / restaurant as per the provisions of the licence. The customer cannot enter the hotel of the petitioner and make a purchase of a bottle of beer for consumption at home. “

The court further said that that the transaction which takes place when a customer enters the licenced premises and purchases alcohol does not come within the purview of a retail sale by a retail dealer. Further, the definition of“retail dealer” and “retail sale price” takes in sale of the commodity in packaged form for the use of the ultimate consumer, and no restriction can be placed on its mode of consumption, the Court observed.

The court said that Rule 18 of the LMPC Rules comes under Chapter II of the LMPC Rules which chapter exclusively deals with the provisions applicable to packaged commodities intended for retail sale and the said chapter can have no application in a case where Indian Made Foreign Liquor is served to customers inside the licenced premises of a Hotel which has been issued FL 3 licence by the competent authority.

Read the Judgment here.