Delhi HC stays guideline barring hotels, restaurants from adding service charge

The Delhi High Court on Wednesday kept the Central Consumer Protection Authority (CCPA) directive forbidding hotels and restaurants from automatically or by default adding service charges in the bill. The National Restaurant Association of India (NRAI) defied the guidelines issued by the CCPA on July 4th.

Judge Yashwant Varma said that the members of the association will duly display and prominently in their lists the obligation of the customer to pay the service fee. The court recorded the association’s pledge not to charge a service fee for fast food. “do not pay. Do not enter the restaurant. “It is a matter of choice,” the court said.

The CCPA also states in the Guidelines that consumers may not be charged for service in any other name. “Service fees will not be charged by adding it with the food bill and GST being charged on the total amount,” it said in the guidelines issued to prevent unfair trade practices and protect consumer interest regarding service charges in hotels and restaurants. .

The NRAI has argued that the service charge tax has been a consistent practice in the hospitality industry for more than 80 years. “There is no law that prevents restaurants from charging service fees. There has been no new law or amendment in existing laws that makes charging service fees illegal. In the absence of due validation and issuance of guidelines, their contents cannot be treated as an order from the government.”

The association has also argued that the service charge tax is a political decision made by restaurant management in order to ensure “industrial harmony” and that the owner has discretion over how his business is run.

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