The Delhi High Court on Wednesday, July 20, stayed the guidelines to prohibit restaurants from charging service charges to customers that was issued by the Central Consumer Protection Authority, multiple reports said. The high court has also issued a notice to the Ministry of Consumer Affairs and Central Consumer Protection Authority on a plea challenging the guidelines restraining the levy of service charge by hotels and restaurants, news agency ANI reported.
The National Restaurant Association of India (NRAI) had moved the Delhi High Court after the Central Consumer Protection Authority in its order issued on July 4 stating that no restaurant or hotel could levy service charge automatically or by default in the bill.
“Don’t pay. Don’t enter the restaurant. It’s a matter of choice,” Justice Yashwant Varma, who was hearing the case noted. However, the judge also observed that eateries must prominently display the levy of service charge on their menus and other places, before staying the guidelines till the next day of hearing that has been fixed on November 25.
“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,” Hindustan Times quoted Varma as saying in his oral order.
On asking the CCPA regarding the reason for issuing the order, the authority replied that it had received numerous complaints on the National Consumer Helpline saying that hotels and restaurants were levying service charge without letting the customer know and by default, as per a report by LiveLaw.
The next date of hearing has been fixed at November 25, which means restaurants and hotels can levy service charge till the date. The NRAI in its petition had stated that the guidelines, which also threw light on what customers should do, were “arbitrary, untenable and ought to be quashed”, and had been issued without considering 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,” the industry body had said in its petition.
Restaurant Service Charge: What CCPA Guidelines Say
As per the order issued by the CCPA on July 4, hotels or restaurant shall not add service charge automatically or by default in the food bill. “No collection of service charge shall be done by any other name. No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion,” it said.
“No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers. Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount,” the guidelines further added.
What Does the Delhi HC Order Mean for Customers?
The CCPA guidelines also said that customers could file complaintson the National Consumer Helpline (NCH) or ask the restaurant or hotel to remove service charge if they violated the guidelines.However, with the latest Delhi HC order on service charge, restaurants can levy service charge and that will not be violation of guidelines. But this will not mean that the customer has to mandatorily pay the service charge, as it was not a compulsory provision even before the CCPA issued its latest guidelines.
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