scorecardresearch
Sunday, Oct 02, 2022

Relief for restaurants after Delhi HC stays guidelines barring service charge

In its guidelines issued on July 4, the CCPA had said that “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.”

The National Restaurant Association of India had approached the court against the guideline, pointing out that the levying of service charge has been a standing practice in the hospitality industry for more than 80 years. (File)

THE DELHI High Court on Wednesday stayed the Central Consumer Protection Authority’s guidelines barring hotels and restaurants from levying service charge “automatically or by default” in the bill.

“If you don’t want to pay, don’t enter that restaurant. It is ultimately a question of choice,” said Justice Yashwant Varma, while hearing the petitions filed by the National Restaurant Association of India and Federation of Hotel and Restaurant Associations of India challenging the CCPA’s guidelines.

However, the court specified that the service charge, and the obligation of the customer to pay it, must be “duly and prominently displayed on the menu or other places”. It also recorded an undertaking that service charge will not be included in the bill for takeaway orders.

Seeking a reply from the Centre and CCPA to the petitions, the court said there would be “a serious doubt” on whether the issue of pricing and service charge falls within the ambit of Section 2(47) (unfair trade practice) of the Consumer Protection Act, 2019. “The matter requires consideration,” it said, while listing the case for hearing on November 25.

Subscriber Only Stories
Uttarakhand resort murder: Amid questions within, BJP may revamp Dhami go...Premium
From suicide to graft: After power shift in Mumbai, key cases go on the b...Premium
Who are the social leaders from Maharashtra holding up Mahatma Gandhi’s l...Premium
Banned: How PFI morphed into a stridently militant outfit over 3 decadesPremium

While an order passed by a high court is operative only within its territorial jurisdiction, the Supreme Court has said in the past that a high court order on writ petitions challenging a central Act or rule will extend “across the whole country”.

In its guidelines issued on July 4, the CCPA had said that “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 had specified that service charge should not be charged from consumers by any other name.

The NRAI, in its petition, said that levying service charge has been a standing practice in the hospitality sector for over 80 years. “There is no law which disallows restaurants to charge service charges. There has neither been a new law nor an amendment in the existing laws which makes the charging of service charge illegal. In the absence of due authentication and promulgation of the guidelines, the contents thereof cannot be treated as an order of the government,” it said.

Advertisement

Stating that the guidelines cannot be made binding, the NRAI said levying of service charge is a matter of contract and decision of the management. “The levying of service charge is displayed at various places in the restaurant. The same is also displayed on the menu cards of the restaurants. Once the customer places the order after being made aware of the terms and conditions, there comes into existence a binding contract,” it said.

It said the system of levying service charge ensures “a systematic and logical distribution of service charge collection among all employees, and not just the employee serving the customer”, arguing that other staff, including chefs and utility workers, would be deprived of the benefit otherwise.

First published on: 20-07-2022 at 11:49:10 am
Next Story

Chandigarh: Punjab police constable injured by bullet from own AK-47

Latest Comment
Post Comment
Read Comments
Advertisement
Advertisement
Advertisement
Advertisement