Service Charge: Can restaurants ask you to pay extra? Here’s what we know so far | Representing
The central government and the Central Consumer Protection Authority (CCPA) on Wednesday filed a plea in the Delhi High Court seeking cancellation of stay over guidelines prohibiting collection of service charge on consumer’s bill by hotels and the restaurants.
Judge Yashwant Varma registered the request for hearing on October 6.
The bench had on July 20 suspended the directives issued on July 4 by the CCPA. This order was challenged by the restaurant authority. Subsequently, the suspension order was challenged before the division bench and the authorities were asked to apply to the single judge for redress.
During Wednesday’s hearing, a bench of Judge Yashwant Varma was told that the Center and the CCPA had filed their counter affidavits on the motions challenging a decision by the National Restaurant Association of India (NRAI) and the Federation of India hotels and restaurants.
The court has instructed attorneys for both authorities to file the documents on file, after which the petitioners may file their responses to the motion.
Counsel for the authorities had argued before the Division Bench that the stay order had been issued by the Single Judge without giving them the opportunity to file their reply on the motion against the directions.
The guidelines for the ban were released after several consumer complaints.
The High Court, when issuing the opinion on another motion by the Federation of Hotels and Restaurants of India (FHRI), had set conditions under which restaurants prominently display the service charge component in the food prices.
Restaurants will not charge a service charge on takeaway/food delivery, the High Court has heard.
The lawyer had also said that various complaints had been received that restaurants were restricting consumers who did not pay the service charge.
HC said, “It’s a matter of choice. Don’t enter the restaurant if you don’t want to pay.” The petition filed by the FHRI stated that the CACP could only issue guidelines. The latest guidelines restricting the collection of service fees are arbitrary.
Previously, the guidelines had been challenged by the National Restaurant Association of India (NRAI). These petitions have been scheduled for November 25, 2022.
The applicant restaurant association had argued that the issue of charging a service charge was not simply like giving a “tip” and that it related to an industry practice governed by the right to enterprise. under Article 19(1)(g) of the Constitution and has lasted for 70 years.
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