Delhi High Court stays guidelines on levy of service charge by restaurants on food bills
text_fields
The Delhi High Court on Wednesday stayed the guidelines that prohibit restaurants from automatically levying service charges on bills.
While hearing petitions from the National Restaurant Association of India (NRAI) and the Federation of Hotels and Restaurant Associations of India challenging the Central Consumer Protection Authority's (CCPA) July 4 guidelines, Justice Yashwant Varma stated that the issue requires consideration and directed the authorities to file their reply.
"Don't pay. Don't enter the restaurant. It's a matter of choice," said justice Yashwant Varma when the counsel for the CCPA told the court consumers should not be forced to pay the service charge.
Single-judge Justice Yashwant Varma, however, said that the fact that particular restaurants levy such charges should be displayed prominently on the menus.
The Court also recorded the undertaking by the restaurants that there will be no service charge on takeaway food orders.
"On a more fundamental claim, the court notes there would be serious doubts as to whether service charge would fall within ambit of Consumer Protection Act, particularly in light of NCDRC order where commission upheld service charge," the judge said in his oral order.
The next date of hearing in this matter is November 25, which means restaurants, hotels and eateries can continue automatically levying service charges to food bills till then.
The petition filed by the NRAI had challenged the CCPA's July 4 guidelines, which barred hotels and restaurants from adding service charge by default to food bills. The guidelines also outlined what steps consumers could take in case of violation of the rule.
Seeking to set aside those guidelines, the petitioners claimed it was 'arbitrary, untenable and ought to be quashed', as it had been issued without appreciation of facts and circumstances.
"Levy of service charge has been a standing practice in the hospitality industry for more than 80 years, which is evident from the fact the Supreme Court took notice of this concept way back in 1964," their petition said.
