Kolkata’s Marco Polo restaurant was recently fined for overcharging on alcohol, as per a new report. The District Consumer Disputes Redressal Commission reportedly fined the famous restaurant ₹1,500 for charging more than the Maximum Retail Price (MRP) for a bottle of beer and a water bottle. Moreover, the brand also added a service charge to the customer’s bill. The customer filed a complaint as Marco Polo reportedly charged her Rs 260 for a bottle of beer and Rs 30 for a bottle of water.
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The customer also mentioned in her complaint that the restaurant charged 5 per cent GST and also added a service charge of 10 per cent of the overall amount. In India, the service charge in restaurants and bars is typically discretionary and not mandatory. This means that while establishments may include a service charge on the bill, customers have the option to pay it or not, based on their satisfaction with the service received.
Unlike countries where service charges are automatically added to the bill, such as the United States, the service charge in India is usually presented as optional. Customers are not legally obligated to pay it, and according to guidelines issued by the Ministry of Consumer Affairs in India, establishments are required to clearly display any service charge they impose. Here is some basic information about alcohol pricing across Indian restaurants and bars.
Overcharging is a violation
It’s important to remember that liquor is a heavily taxed commodity, and the price of alcohol can depend on where you purchase it from. But overcharging or pricing it more than the MRP is not legal. If a customer has to pay more than the MRP at restaurants or to a vendor, the customer can file a complaint against the seller. Costs like transportation and refrigeration are factored into the MRP, and under the provisions of the Central Law of Metrology Act, any retailer violating the law can be charged a fine.
However, you should be aware of any taxes or service charges that may be applicable. Each state imposes its own excise duties, taxes, and licensing requirements, which significantly influence pricing.
According to The Legal Metrology Act, 2009, it is illegal for any establishment, including restaurants, to charge more than the MRP for packaged products such as bottled water, soft drinks, or other beverages.
However, there have been instances where restaurants have been found violating these regulations and overcharging customers for bottled products. To address such issues, consumers can report violations to the local Legal Metrology department, and action can be taken against the erring establishments.
What Is Markup?
The cost markup strategy is a fundamental approach adopted by bars and restaurants to determine alcohol prices. This strategy involves calculating the cost of procuring alcoholic beverages, including wholesale prices, taxes, and operational expenses and adding a predetermined markup percentage to generate profit margins.
Factors such as brand reputation, demand, and competition influence the markup percentage applied. While premium establishments may impose higher markups to reflect exclusivity and quality, budget-friendly venues often maintain lower markups to attract price-sensitive consumers.