Secunderabad Hotels PVT LTD vs. The State Of Telangana

WP/6386/2022HC TelanganaGSTCNR HBHC01007846202213 March 2024Bench: K. SARATH8 pages

For Petitioner: SRI M.RAVINDRANATH REDDYFor Respondent: GP FOR CIVIL SUPPLIES

AI SummaryAllowed

Facts

The petitioners, companies engaged in the hotel and restaurant business, challenged the applicability of the Legal Metrology Act, 2009, and its associated rules to their establishments. The District Inspector, Legal Metrology Department, had conducted a panchanama on January 7, 2022, alleging the sale of a 'Red Bull Retail Tin' for Rs. 115 inclusive of taxes, and that CGST and SGST were collected on it, contravening Rule 1B(2) of the Legal Metrology (Package Commodities) Rules, 2011. The seized item was a packaged commodity. The petitioners sought a writ of mandamus to declare the Legal Metrology Act and Rules inapplicable to them and to restrain the respondents from taking any action. The Court had previously granted an interim order on February 4, 2022, in favor of the petitioners, referencing a Supreme Court judgment.

Held

The Court allowed the writ petition, holding that the provisions of the Legal Metrology Act, 2009, and the associated rules are not applicable to the petitioners in relation to unpackaged food or beverage items sold by them. The Court's reasoning was based on the submissions made by both sides and the reliance on the Supreme Court judgment in Federation of Hotels and Restaurant Association of India Vs. Union of India and Ors., and the High Court's own decision in Multiplex Association of India Vs. The Controller of Legal Metrology. The Court directed the respondents not to conduct any further inspections or seizures concerning unpackaged food or beverage items sold by the petitioners, nor to interfere with their equipment, machines, devices, or other belongings. The Court explicitly noted that the issue pertained to unpackaged items, and the panchanama mentioned a packaged commodity. No order as to costs was made.

Key Issues

1. Whether the provisions of the Legal Metrology Act, 2009, and the Legal Metrology (Package Commodities) Rules, 2011, are applicable to the petitioners, who are engaged in the business of hotels and restaurants, particularly concerning the sale of packaged commodities. The petitioners argued that their business primarily involves providing services and that the Legal Metrology Act and Rules are not applicable to them, citing the Supreme Court judgment in Federation of Hotels and Restaurant Association of India Vs. Union of India and Ors., and a coordinate bench's decision in Multiplex Association of India Vs. The Controller of Legal Metrology. They contended that the action initiated against them was illegal, arbitrary, and without jurisdiction. The respondents, represented by the Government Pleader for Civil Supplies and Standing Counsel, did not dispute the submissions made by the petitioners' counsel.

Sections Cited

Rule 1B(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

[ 3302 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE THIRTEENTH DAY OF MARCH TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE K. SARATH WRIT PETITION NO:6386 OF 2022 Between: 1. Secunderabad Hotels Pvt Ltd, 1-2-166 to 193, -l 10, 1st Floor, Bhuvana Towers, S D Road, Secunderabad - 500003. Rep. by its Chief Finance Officer V.Krishna Mohan Reddy S/o Late V.Chandra Shekar Reddy, Aged 66 years. 2. Blue Fox Restaurant and Lounge, 1St Floor, R.K. Complex, Road No. 2, Banjara Hills, Hyderabad -500 034. 3. Hotel Minerva Grand, 1-2-166 to 193, 110, Bhuvana Towers, S.D. Road, Secunderabad - 500 003. 4. Blue Fox Restaurant and Bar, 3-6-199/'1 , Himayatnagar, Hyderabad-500029. 5. tv nerva Coffee Shop, 3-6-199/'1 , Himayatnagar, Hyderabad-500029 6. Hotel lVrnerva Grand Banjara, 8-2-616, Road No.11, Banjara Hills, Hyderabad - 500 034. 7. Hotel N4rnerva Grand, Survey No.13, D.No.2-9114, Adjacent Silicon Towers, Kondapur, Hyderabad - 500 084. 8. tvlinerva Coffee Shop, Survey No.105/A, near Cine Planet Kompally, Hyderabad - 500 014. 9. BIue Fox Bar and Restaurant, Survey No.105/A, near Cine Planet Kompally, Hyderabad - 500 014 10. Mr A Lokeshwar Reddy, S/o Sri A.VijayavardhanReddy, H.No. 8-2-693/2/41 , rvlythrli Nagar, Road No.12, Banjara Hills, Hyderabad-S00 034 ...PETITIONERS AND 1 The State of Telangana, Rep. by its Secretary, Department of Crvil Supplies and Legal Metrology, Secretariat, Hyderabad. 2. The Secretary, Department of Civil Supplies and Legal Metrology, Government of Telangana, Secretariat, Hyderabad 3. The Controller, Legal Metrology, Government of Telangana, 209, PWD Buildrng, Gandhinagar, Hyderabad -500 080, 4. I'he District lnspector, Legal Metrology Department, Head Quarters -Vlll, Government of Telangana, Gandhi Nagar, Hyderabad. ...RESpONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circunrstances stated in the affidavit filed therewith, the High Court may be pleased to rssue Writ of Mandamus declaring that the provisions of the Legal Metrology Act, 2009, (Act No.1 of 2010) and the Rules framed thereunder namely .// (i) the (Legal lvletrology Package Commodities) Rules, 20'1 '1 and (ii) Telangana Legal Metrology (Enforcement) Rules, 2O11, are not applicable to the Petitioners and its establishments and consequently, declare that the action initiated against the 3rd Petitioner vide Panchanama/Proceedings dated 071O112022 as illegal, arbitrary and one without jurisdiction and Contrary to the law declared by the Honorable Supreme Court in Judgment reported in 2018 (2) SCC 97 and to restrain the Respondents, their Subordinates and Agents from taking action of whatsoever a(yainst the Petitioners pursuanl to the provisions of the Act No.1 of 2010 and the Rules framed thereunder, irrcluding inspecting and/or initiating any legal proceedings, Civil or Criminal, against the Petitioners or its Directors or its Heads or its Employees. lA NO: 1 OF 2022 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petrtion, the High Court may be pleased to stay all further proceedrngs pursuant to the lnspections caused on 07lO1l2O22 with respect to the 3rd Petitioner pending disposal of the Writ Petition. Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to restrain the Respondents ernd therr subordinates from interfering with the activities of the '1St Petitioner Company and its Establishments by invoking provisions of the Legal Metrology Act, 2009 (Act No 1 of 2010). the Legal Metrology (Packaged Commodities) Rules, 2011 :rrrd [he Telangana Legal Metrology (Enforcement Rules), 2011 including inspections, decoy operations seizures and initiating any legal proceedings, Civil or Crirninal against the Petitioners, its Establishments, its Directors and its Employees. pending disposal of the above Writ Petition. lA NO: 2 OF 2022 / lA NO: 3 OF 2022 Between: 1. The State of Telangana, Rep. by its Secretary, Department of Civil Supplies and Legal Metrology, Secretariat, Hyderabad. 2. The Seiretary, De-p-artment of Civil Supplies and Legal Metrology' Government of Telangana, Secretariat, Hyderabad 3. The Controller, Legal-Metrology, Government of Telangana' 209, PWD Building, Gandhinagar, Hyderabad -500 080, 4. The Di;trict lnspect-or, Lelal tvletrology Department, Head Quarters -Vlll' Government of Telangana, Gandhi Nagar, Hyderabad. ...pETlTlONERS/ RESPONDENTS AND I I 1. Secunderabad Hotels P\i't Ltd, 1-2-166 to '193, 110, 1st Floor, Bhuvana Towers, S D Road, Secunderabad - 500003. Rep. by its Chief Finance Officer V.Krishna Mohan Reddy Sio Late V.Chandra Shekar Reddy, Aged 66 years. - 2. Blue Fox Restaurant dnd Lounge, 1St Floor, R.K. Complex' Road No. 2' Banjara Hills, Hyderabad -500 034. 3. Hotel fi/inerva Grand, 1-2-166 to 193, 110, Bhuvana Towers, S.D. Road' Secunderabad - 500 003. 4. Blue Fox Restaurant and Bar, 3-6-199/1 , Himayatnagar, Hyderabad-500029. 5. Minerva Coffee Shop, 3-6-199/1 , Himayatnagar, Hyderabad-500029 6. Hotel Minerva Grand Banjara, 8-2-616, Road No.11, Banjara Hills, Hyderabad - 500 034 7. Hotel [/inerva Grand, Survey No.13, D.No.2-9114, Adjacent Silicon Towers, Kondapur, Hyderabad - 500 084. 8. Minerv'a Coifee Shop, Survey No.105/A, near Cine Planet Kompally, Hyderabad - 500 014. 9. Biue Fox Bar and Restaurant, Survey No.1 05/A, near Cine Planet Kompally' Hyderabad - 500 014 tO.tvt?. R.t-ot<eslrwar Reddy, S/o Sri A.VijayavardhanReddy' H.No. 8-2-69312141' Mythili Nagar, Road No.12, Banjara Hills, Hyderabad-soo 034 ...RESPONDENTS/ PETITIONERS Petition under section 151 CPC praying that in the circumstances stated in the affidavit frled in support of the petition, the High court may be pleased to vacate the rnterrm order daled. 04-02-2022 in W.P.No.6386 0f 2022 and also dismiss the Writ Petition. Counsel for the Petitioners: SRI M.RAVINDRANATH REDDY Counsel for the Respondents: GP FOR CIVIL SUPPLIES

The Court made the following: ORDER

THE HON'BLE SRI JUSTICE K'SARATH WRIT PETITION No.6386 of 20.22 ORDER: Heard, both sides and perused entire material on record. 2. karned Counsels for the petitioners submits that the petitioners herein are the companies incorporated under the provisions of the Companies Act' 1956 with a main object to do business in thc held of Hotels and Restaurants etc'' in which respondent No'4/the District lnspector' Legal Metrolory Depa-rtment has conducted Panchanama dated 07.O1.2O22 and stating that there u'as sale of one "Red Bull Retail Tirt for Rs'115 inclusive of all taxes and also collected CGST and SGST on it, thus' contravened RuIe 1B(2) of the (Legal Metrolory Pachage Commodities) Rules ' 2)ll and seized the same'

Learned Counsel for the petit'ioners lurther submits that this Court has granted interirn order on 04'O2'2O22 in - 2 to'interfere with the day to day arrairs of the petitioner No. 1. 4. Learned Counsels for the petitioners submits that the case of the petitioner is squarely covered by the decision rendered in Multiplex Associatlon of Ind.ia I/s. the Controller of Legal Metrologgf passed by this Court and the relevart portion of the said order is as follows: "62.A.(a) that the impugned orders issued by the tst respondent insofar as the requirement of affixture by sticker on the contain€r / packing (a) net quantity by weight, volume or measure, (b) fU.R.e., (c) consumer helpline toll free number and consumer helpline whatsapp number and (d) asking them to print a declaration on the container / packing these details, do not apply as regards non_packaged food items sold by members of the petitioner,s Association; and cannot be enforced by officials attached to the Office of the lst respondent irrofar as non. packaged food items sold by members of the petitioner,s Association; ' 120t 81 z scc st t Unreported Order passed by this Court in W.P.No.27029 of 2018 dated 06.08.2018 fl

3 1 I (b) that the t't respondent is not entitled to insist that MultiPlexes should avoid keeping only one brand of water, etc., and have to give options to the consumer."

Learned Counsel for the petitioners further submits that in tha Ught of the Judgments passed by the Hon'ble Apex Court in Federation of Hotels and Restaurolt Assoclation of India Vs. Union of India and Ors. (Suprrr 'Il as well as Controller of Legal Metrologg (Supra 2/ requested this I/ as wetl as this Court in Multiplex Association oJ India \ t

4 Vs. the Controller of l*gal Metrologg (Supra 2) and directing the respondents not to conduct any further inspection or seizure in relatioh to the unpackaged food or beverage items being sold by the petitioners or any of the equipment or machines or devices or other goods or belongings of the petitioners within their premises. There shall be no order as to costs.

The Registry is directed to enclose the copy of the Judgment passed in W.P.No.27O29 of 2018 dated 06.08.2018 along with this order.

Miscellaneous petitions, if any, pending shall stand closed. K. VENKAIAH ASSISTANT REGISTRAR \q-\i SECTION!FFtCER //// To PSK KKS l The secretary. Deoartment of civir Suppries and Legar Metrorogy, Secretariat, ^ Hyderabad, State bt Tetangana

The Secretary. Deoartmen"t of Crvrt Supplies and Legal Metrology, ^ $ove11e1t 6f Teiansa na.s".rutJ,.Li -rivi;;b;"' J. tne Controller. Leoal A,4etrology, Governnienl of Telangana, 2Og, pWD . Buitdins, Gandhini'sar, uyaei#J_soodsij: -' '"'' 4 The Districl rnsoect6r. r egar A/elrorogyblprrt.ent, Head euarters -V[, _ Government of Tetanqan;, canoni r.t"Jqi r,'H vi]ljiril'ro 5. one cc ro SRt rrlt nnVrr,ro-nnrvniH CEDbV:A;;;re lopuc]

Iwo CCs to Gp FOR CtvtL_SUppUes, High bJri?r tne State of _ Telangana, at Hyderabad [OUT] 7 . Two CD Copies - \.Y

HIGH COURT DATED:1 310312024 . P-,..t : I / r L: . Lt \ \'l \ ORDER WP.No.6386 of 2022 ALLOWING THE WRIT PETITION WITHOUT COSTS. .J..-5 1B r1r

Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.