SERVICE CHARGE NOT MANDATORY: Delhi High Court Gives Big Relief to Consumers

New Delhi (The Uttam Hindu): In an important decision, the Delhi High Court has said that hotels and restaurants cannot compulsorily add service charge to the food bill. The court clarified that customers can pay service charge at their own will, but it cannot be made mandatory. Justice Pratibha M Singh gave this decision on the petitions filed by the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Association of India. In these petitions, the guidelines of the Central Consumer Protection Authority (CCPA) were challenged. The High Court has dismissed these petitions and also imposed a fine of Rs 1 lakh on the restaurant association.

According to a Bar & Bench report, the CCPA had issued guidelines to protect the rights of consumers and prevent unfair trade practices. The key points of these guidelines were as follows:

* Hotels or restaurants will not add service charge automatically or by default to the food bill.

* Service charge cannot be charged under any other name.

* No restaurant or hotel can force customers to pay service charge. They must clearly state that it is optional.

* No restriction will be imposed on entry or services of customers based on payment of service charge.

* Service charge will not be collected by adding it to the food bill and levying GST on the total amount.

In its petition, the NRAI had argued that there is no law that prohibits restaurants from levying service charge and no amendment has been made in the existing laws that makes it illegal. The association had also said that the CCPA guidelines cannot be treated as government orders and are arbitrary and capricious, hence they should be repealed. However, the High Court rejected these arguments.