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M/s. Hotel Savoy Bar Versus State of Kerala

2016 (338) E.L.T. 689 (Ker.) - Charging excess amount than MRP on beer - Legal Metrology (Packaged Commodities) Rules 2011 - Section 18 of the Legal Metrology Act, 2009 - retail dealer retail sale reatail sale price whether the serving of Indian Made Foreign Liquor in a Hotel Bar licenced by the Excise authorities in the State of Kerala will come within the definition of retail sale by a retail dealer and whether the act of selling the item over and above the retail sale price would attrac .....

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- The decision in the case The Federation of Hotels and Restaurants Association of India and Ors V Union of India [2007 (3)336 - HIGH COURT OF DELHI] has been followed - continuance of prosecution against the petitioners can only be vexatious petition allowed decided in favor of petitioner - Crl. MC. No. 1267 of 2013 - Dated:- 22-3-2016 - MR. RAJA VIJAYARAGHAVAN V J. Smt. Sumathy Dandapani, Sr. Advocate and Shri Millu Dandapani Advocate for the Petitioners. Sri. Baby Thomas Public Prosec .....

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w runs thus: An inspection was conducted on 22.12.2011 by the second respondent in the premises of M/s Hotel Savoy Bar at Kozhikkode. He placed an order for 3 portions of 90 ml- MC Whisky, 1 portion of 90 ml -MC Brandy, one bottle of Beer, snacks and a soda and on his request a bill was issued for the same. Measurements were made in respect of Whisky and Brandy supplied to the complainant and the same revealed that it was in accord with the order placed. In respect of the beer purchased by the S .....

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vity )and punishable under section 32 (2) of the L.M.P.C. Rules. The aforesaid proceedings are under challenge in this petition. 3.I have heard the learned counsel appearing for the petitioners as well as the learned Public Prosecutor. 4.The learned counsel appearing for the petitioners would submit that M/s Hotel Savoy Bar is a hotel which was being run on the strength of a Foreign Liquor - 3 ( FL3) licence issued by the designated authority of the Department of Excise and the terms of licence .....

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uld include comfortable seating, climate conditioning, bearers at the beck and call of the guest, music, snacks, etc., and therefore they are justified in charging for the whole service which is inclusive of the amenities provided and the act of the 2nd respondent in categorizing the same as retail sale of individual items is against all tenets of law. Relying on the Judgment of the Apex Court in State of Himachal Pradesh and others V. Associated Hotels of India Ltd., [AIR 1972 SC 1131], it was .....

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e unreported judgment of this Court in Crl. M.C. No 996 of 2009 to advance his contentions. According to the learned counsel the prosecution of the petitioners on the strength of unsustainable allegations is liable to be interfered with by this Court and quashed at the threshold itself by exercising the powers under S 482 of the Code. 5.Au Contraire, the learned public prosecutor would vehemently oppose the contentions of the learned counsel and would submit that the uncontroverted allegations c .....

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ccording to the complainant violates Rule 18 (2) of the LMPC Rules 2011 read with Section 18 of the L.M. Act and hence punishable under Rule 32 (2) of the LMPC Rules, 2011. It will be apposite to refer to the above provisions . 8.Section 18 of Act 1 of 2010 reads as follows :- 18. Declarations on pre-packaged commodities.-(l) No person shall manufacture, pack, sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity unless such package is in such standard q .....

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.Rule 18 (2) of the LMPC Rules, 2011 which is said to have been violated is extracted below for east reference : Rule 18 :- (1) XXXXXXXXXX (2) No retail dealer or other person including manufacturer, packer, importer and whole-sale dealer shall make any sale of any commodity in packed form at a price exceeding the retail sale price thereof. 11. Rule 18 unmistakably penalises a retail dealer or other person which includes a manufacturer, packer, Importer or wholesale dealer from making any sale o .....

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onsumer; Rule 2(l)- "retail sale in relation to a commodity means the sale distribution or "delivery of such commodity through retail sales shops agencies or other instrumentalities for consumption by an individual or a group of individuals or any other consumer; Rule 2 (m)- "retail sale price" means the maximum price at which, the commodity in packaged form may be sold to the ultimate consumer and the price shall be printed on the package in the manner given below; "Max .....

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ustomer and includes a wholesale dealer. Retail Sale means, in relation to a commodity, sale, distribution or delivery of such commodity through retail sales shops, agencies or other instrumentalities by an individual or a group of individuals or any other consumer. Retail sale price means the maximum price at which the commodity in packaged form may be sold and the mode in which the price is to be printed in the package has also been defined. 14.After having understood the meaning and purport o .....

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, the 1st petitioner is a Bar Hotel of which the 2nd petitioner is the Managing Director. They have been conducting the Bar on the strength of an FL-3 licence issued by the Excise Department. A brief perusal of the terms of the FL3 licence as per the Foreign Liquor Rules will be instructive in this regard, The privilege as per the FL3 licence issued extends to the sale of foreign liquor for consumption within a room specifically approved for the purpose to residents in the Hotel or Boarding Hous .....

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the restaurant where they take food. It is also specifically mandated that the Hotels should have an exclusive restaurant for the use of families and others where liquor is to be served. 16.It would also be profitable to note that in the State of Kerala, the wholesale business in foreign liquor is the monopoly business of a fully owned Government Company by name Kerala State Beverages (Manufacturing and Marketing) Corporation Limited, which Corporation is the only source from which liquor can b .....

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phrase can be carried out in the State of Kerala only by these Government owned Corporations. 17.In this context reference is to be made to some of the decisions cited by the learned counsel to advance the contention that the nature of service conducted in a Hotel or Restaurant can never be categorized as a retail sale will be apposite. Though that same was rendered in a different context, I am of the view that, the principles laid down therein would shed ample light on the question in controver .....

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him during his stay in the hotel? It stands to reason that during such stay a well equipped hotel would have to furnish a number of amenities to render the customer's stay comfortable. In the supply of such amenities do the hotelier and his customer enter into several contracts every time an amenity is furnished? When a traveller, by plane or by steam-ship, purchases his passage-ticket, the transaction is one for his passage from one place to another. If, in the course of carrying out that .....

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a laundry, there is a transaction, which essentially involves work or service, and if the laundryman stitches a button to a garment, which has fallen off, there is no sale of the button or the thread. A number of such cases involving incidental uses of materials can be cited, none of which can be said to involve a sale as part of the main transaction. 14. The transaction in question is essentially one and indivisible, namely, one of receiving a customer in the hotel to stay. Even if the transac .....

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by him. Even if that be so, mere transfer of property, as aforesaid, is not conclusive and does not render the event of such supply and consumption a sale, since there is no intention to sell and purchase. The transaction essentially is one of service by the hotelier in the performance of which meals are served as part of and incidental to that service, such amenities being regarded as essential in all well conducted modern hotels. The bill prepared by the hotelier is one and indivisible, not b .....

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the parties. (Emphasis supplied ) 18.Taking cue from the nature of the licence issued by the excise authorities to the petitioner and the ratio of the law laid down by the Apex Court, it is indefensible that the 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 havin .....

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ost 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 consum .....

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a customer enters the licenced premises and purchases alcohol comes 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. For the reasons already stated, by virtue of the terms of the FL3 licence, the petitioners herein are prohibited from selling the goods in the packaged form to the cu .....

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ued FL 3 licence by the competent authority . 20.In M/s. Northern India Caterers India Vs. Lt. Governor of Delhi (AIR 1978 SC 1591) the principle laid down in Associated Hotels of India (supra) was reiterated and it was held that the service of meal to casual visiors in a restaurant is not taxable as a sale whether a charge is imposed for the meal as a whole or according to the dishes separately ordered. A review petition was filed to review the judgment in Northern India Caterers India (supra) .....

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t or round-thecity visits, shoe-shining, air-conditioning, massage in the room etc., on a consolidated sum. You cannot dissect the items or decode the bill to discover separately the component of goods sold. This situation may obtain even in India with the throng of foreign tourists who want to be taken care of and pay allinclusively. This may happen in some fashionable restaurants where you cannot, as of right, remove from the table what is left over. In these cases the decision under review sq .....

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