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Service Charge Can be Continued for Now, Delhi HC Seeks Stand of Restaurants on CCPA Appeal

By: Business Desk

News18.com

Last Updated: August 18, 2022, 16:23 IST

New Delhi, India

Restaurants often levy a service charge on customers on top of their food bills.

Restaurants often levy a service charge on customers on top of their food bills.

Service Charge: CCPA has said that levying of service charge an important issue for consumers and a detailed hearing is required.

Service Charge Row: Restaurants can levy service charges on customers for the time being, the Delhi High Court has said. The HC has also sought stand of restaurant bodies on the on appeal filed by the Central Consumer Protection Authority.

The Delhi High Court was hearing a plea by Central Consumer Protection Authority or CCPA earlier today. The CCPA said that levying of service charge is an important issue for consumers and a detailed hearing is required. To this, the high court sought the response of the restaurant bodies and said that eateries can charge customers for now, before posting the matter for further hearing on August 31.

The high court’s comments came after it had on August 16 quipped restaurants on the levying of service charge. “Can consumers be compelled to pay service charge?” the high court quipped urging restaurants to increase salaries if restaurants are worried about their staff. The Delhi HC had also likened the service charge levied to that of a governmental levied tax.

The HC observations have come after the CCPA had moved the divisional bench of the Delhi HC against the levy of Service Charge. It had on August 16 questioned the CCPA over consumers being compelled to pay the service charge and asked why restaurants that are concerned about their employees can’t raise prices and raise salaries instead of levying service charges adding that “the common man may perceive service charge as a government levy.”

On July 20, the high court had stayed the CCPA guidelines barring restaurants from levying service charge.  The stay of the fresh guidelines of the country’s consumer watchdog on July 20 came after the challenging plea of the National Restaurant Association of India (NRAI). Following this, the CCPA had moved the high court challenging the decision. A division bench headed by Delhi HC Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad is currently conducting the hearing on the matter.

In the last hearing, Justice Yashwant Varma remarked, “Don’t pay. Don’t enter the restaurant. It’s a matter of choice.”

However, the Chief Justice-headed bench has been questioning restaurant bodies on charging of a service fee by default on top of food bills. It earlier observed that the service charge was “very much connected with consumers”.

The CCPA on July 4 issued guidelines saying that 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.

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first published:August 18, 2022, 14:25 IST
last updated:August 18, 2022, 16:23 IST