Case: Federation of Hotel &amp; Restaurant Associations of India Vs. Union of India &amp; Others

3. The appellants main concern was that the Controller of Weights and Measures was seeking to proceed against the hotels and restaurants of thefor charging a price higher than the printed Maximum Retail Price ("MRP" in short) for supply of packaged water bottles during services provided to their customers while in the hotels and restaurants. The appellants plead in the Writ Petition that the transaction consisting predominantly of a service, and not of a sale of drinking water, consisted of a composite charge which included incidental charges for food, drinks etc. The challenge in the Writ Petition resulted in a judgment by the learned Single Judge dated 05.03.2007. The judgment of the learned Single Judge referred to and relied upon the decisions in The State of Punjab v. M/s. Associated Hotels of India Ltd. (1972) 1 SCC 472 , Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi, [1979] 1 SCR 557  and the review judgment in the latter case reported in (1980) 2 SCC 167.  After discussing these judgments in detail, and considering the statement of objects and reasons of the Standards of Weights and Measures Act, the learned Single Judge finallyIn the above analysis I hold that charging prices for mineral water in excess of MRP printed on the packaging, during the service of customers in hotels and restaurants does not violate any of the provisions of the SWM Act as this does not constitute a sale or transfer of these commodities by the hotelier or Restaurateur to its customers. The customer does not enter a hotel or a restaurant to make a simple purchase of these commodities. It may well be that a client would order nothing beyond a bottle of water or a beverage, but his direct purpose in doing so would clearly travel to enjoying the ambience available therein and incidentally to the ordering of any article for consumption. Can there by any justifiable reason for the Court or Commission to interdict the sale of bottled mineral water other than at a certain price, and ignore the relatively exorbitant charge for a cup of tea or coffee. The response to this rhetorical query cannot but be in the negative. Although the vires of Rule 23 have been assailed, I do not find it necessary to answer that challenge since the provision relates to sales between dealers and neither the hotels and restaurants of the one part and customers of the other falls within this categorization.In a Letters Patent Appeal filed before the Delhi High Court, by a judgment dated 11.02.2015, the Division Bench recorded that the counsel for the writ petitioners was agreeable to disposing of the appeals in a particular manner and accordingly, the appeals were disposed of in such manner. Paras 16 & 17 of this judgment are set out hereinThe counsel for the writ petitioners is agreeable to our disposing of these appeals with observations that the judgment of the learned Single Judge shall not come in the way of the appellant enforcing the provisions of the new Act even if identical or similar to the old Act and it being left to be adjudicated in the proceedings if any initiated under the new Act whether hotels/restaurants, are entitled to do so or not.17. We accordingly dispose of these appeals in following terms:A. Owing to the change in law, there is no need to set aside or affirm the judgment of the learned Single Judge.B. However the question of law adjudicated by the learned Single Judge is left open for adjudication in any fresh proceeding under the new law and the judgment of the learned Single Judge shall not be a precedent in any such adjudication even if the concerned provisions of the old and the new law are identical/similar.C. The appellant shall however not be entitled to initiate any proceeding/prosecution for violation of the old law in this respect, even if notices of such violation were issued, as in our opinion, considering the nature of offence, the long time which has elapsed and the doubt which has arisen whether such prosecution will be within the prescribed time, it is not deemed expedient that the state resources in this regard, which are already strained, be expended thereon.A Review Petition was then filed against the aforesaid judgment which met with no success, in that the review was dismissed by an order dated 15.05.2015, in which it was pointed out that the practice of review being sought on a ground which is not supported by the original advocate but by a different advocate has been deprecated, and hence the review was dismissed.

Court's reasoning:
Since it is not possible to divide the "service element", which is the dominant element, from the "sale element", it is clear that such composite contracts cannot be theof sales tax legislation, as was held in thosereading of the constitutional amendment would show that supply by way of or as part of any service of food or other article for human consumption is now deemed to be a sale of goods by the person making the transfer, delivery or supply.On a reading of the said Act and the Rules made thereunder, it is clear that the position qua "sale" remains exactly the same as that contained in the 1976 Act, which now stands repealed. This being the case, we are of the view that the learned Single Judge was absolutely correct in his conclusion that despite the constitutional amendment having been passed, the definition of "sale" contained both in the 1976 Act and now in the 2009 Act would go to show that composite indivisible agreements for supply of services and food and drinks would not come within the purview of either enactment, and that this is for the very good reason that the object for both these enactments is something quite differentthe object being, as has been pointed out above, to standardize weights and measures for defined goods so that quantities that are supplied are thus mentioned on the package and that MRPs are mentioned so that there is one uniform price at which such goods areshould not interfere with the said judgment.It is settled law that any such concession made on a question relating to jurisdiction to proceed further, particularly qua criminal prosecutions, does not bind the party in question. It is of utmost importance for all to know exactly how they stand in such cases.A cursory reading of the aforesaid definition would show that it refers only to the fact that acommodity should have aquantity as stated in the definition section. It has no bearing whatsoever on the issue beforeand foremost, a reading of the opening of Rule 3 would show that the provisions of the Chapter would not apply to packaged commodities meant for institutional consumers such as hotels. Also, the Rules cannot take us very much further when it has already been held by us that the Act itself would not apply for the reasons given herein above.17. We are, therefore, of the view that neither the Standards of Weights and Measures Act, 1976 read with the enactment of 1985, or the Legal Metrology Act, 2009, would apply so as to interdict the sale of mineral water in hotels and restaurants at prices which are above the MRP.