Restaurant cannot charge above MRP for packaged water, rules Chandigarh consumer commission; diner awarded Rs 3,000 compensation

Restaurant cannot charge above MRP for packaged water

• Restaurants cannot charge above MRP for sealed, pre-packaged water bottles.
• Chandigarh restaurant to refund excess charge, pay Rs 3,000 compensation.
• Commission ruled ambience or service costs don't justify selling above MRP.

Did our AI summary help?

The Chandigarh State Consumer Disputes Redressal Commission has ruled that restaurants cannot charge more than the Maximum Retail Price (MRP) printed on sealed, pre-packaged water bottles, even when such items are sold within restaurant premises. Setting aside an earlier district forum order, the Commission directed a Chandigarh-based restaurant to refund the excess amount charged to a customer and pay Rs 3,000 as compensation for harassment and unfair trade practices

Ishan Khanna vs Ghazal restaurant case arose after a diner was billed Rs 55 for a packaged water bottle carrying an MRP of Rs 20, along with GST on the inflated amount. The woman challenged the charge, arguing that the bottle was a pre-packaged commodity governed by the Legal Metrology (Packaged Commodities) Rules, 2011, which clearly prohibit sale above the printed MRP.

Allowing the appeal, the State Commission held that once an item is sold as a sealed, pre-packaged commodity, the restaurant effectively acts as a retail dealer. The place of sale, whether a supermarket or a fine-dining restaurant, does not alter the legal position. The Commission observed that the MRP already includes all applicable taxes and retailer margins, leaving no scope for charging any additional amount.

Legal experts say the ruling settles a long-standing area of confusion around the pricing of packaged goods in restaurants. Soayib Qureshi, Partner at PSL Advocates & Solicitors, noted that the Commission reiterated that “the MRP printed on pre-packaged goods takes into account all taxes and service charges, and any amount charged beyond it amounts to an unfair trade practice under the Consumer Protection Act.” He added that the complainant succeeded because no provision of law permits differential pricing for packaged items based on location or ambience.

Aditya Chopra, Managing Partner at The Victoriam Legalis, said the Commission made it clear that even when a packaged product is sold inside a restaurant, it remains a retail sale under the Legal Metrology framework. “The ruling underlines that restaurants may discount packaged goods if they choose, but they are absolutely prohibited from charging more than the MRP. The intent of including taxes in the MRP is to ensure transparency and eliminate hidden charges,” he explained.

The restaurant had defended its pricing by citing ambience, air-conditioning, service quality and infrastructure costs. However, the Commission rejected this argument, drawing a clear distinction between food and beverages prepared in-house, where restaurants enjoy pricing freedom, and packaged commodities, which are subject to statutory price ceilings.

Naman Bagga, Partner at C&S Partners, said the Commission firmly rejected “ambience-based pricing” for packaged goods. “Charging Rs 55 for a bottle marked at Rs 20, and then levying GST on the inflated price, was held to be illegal. The ruling reinforces that selling packaged goods above MRP is an unfair trade practice under the Consumer Protection Act, 2019,” he said.

The order also took note of the fact that GST was charged on the inflated price, despite tax already being embedded in the MRP. This, the Commission observed, amounted to impermissible double taxation.

Prerna Robin, Principal Associate at B. Shanker Advocates, described the judgment as a clear warning to the hospitality sector. “The Commission has drawn a bright line between pricing discretion for in-house food and the statutory ceiling applicable to sealed, pre-packaged goods. Ambience or service costs are legally irrelevant once an item bears an MRP,” she said.

For consumers, the ruling reinforces the right to pay only the printed MRP for packaged items, regardless of where they are purchased. For restaurant owners, it signals heightened scrutiny of billing practices and the risk of refunds, compensation and reputational damage if MRP norms are violated.