Delhi HC : Continue Levying Service Charges On Food Bills

The Central Consumer Protection Authority (CCPA) was asked to urge the Delhi High Court to move its single-judge bench to vacate the stay on its guidelines prohibiting such charges at restaurants, but the Delhi High Court recently still allowed restaurants to continue adding service charges to food bills until August 31. 

On an appeal by the CCPA against the stay granted by a single bench on the rules prohibiting restaurants from levying service charges, a bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad also issued a notice to restaurant bodies, including the Federation of Hotel and Restaurant Associations of India and the National Restaurant Association of India. Additionally, it requested that the petition be listed before Justice Yashwant Varma's single-judge bench via its registry within 10 days. 

For the CCPA, Additional Solicitor General Chetan Sharma contended that the single judge's decision to halt its guidelines—which were only published after hearing complaints from customers against restaurants—violated the norms of natural justice. Customers perceive the service charge as a government tax and feel embarrased if they refuse to pay it, despite the fact that the restaurant is free to set its own food prices. 

Senior attorney Kapil Sibal argued on behalf of the groups that the service charge has been in place for 70 years and that the money only benefits the employees. When the money is divided among the personnel, the restaurants also have to pay TDS in addition to GST on these service fees, he said. 

Justice Verma further ordered that the information about the imposition of a service charge must be printed on menu cards so that clients are aware of this price before granting the stay on July 20. Additionally, he had written down the restaurants' promise that takeout meal orders won't be subject to a service fee. In order to prevent unfair business practices and violations of consumers' rights with regard to the imposition of service fees, the CCPA had published rules. According to the rules, hotels and restaurants were not permitted to collect service charge under any other name.