Delhi HC Stays CCPA Guidelines Prohibiting levy of Service Charges on Food Bills by Hotels and Restaurants

Delhi HC - CCPA Guidelines - Service Charges - Food Bills - Hotels and Restaurants - taxscan

The Delhi High Court, on Wednesday has stayed the recent guidelines prohibiting hotels and restaurants from levying service charge automatically on food bills.

The Central Consumer Protection Authority (CCPA) on first week of July barred hotels and restaurants from levying service charges automatically or by default in food bills. It allowed customers to file complaints in case of violation with the consumer commissions, including through ‘e-daakhil’, and even district collectors.

As per the CCPA guidelines, the hotels or restaurants shall not force a consumer to pay service charge and shall clearly inform the consumer that service charge is at the consumer’s discretion and there will be no restriction on entry to a customer on this basis.

However, on Wednesday, Justice Yashwant Varma, while dealing with petitions by the National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India said the issue requires consideration and directed the authorities to file their reply.

According to the Court order, the stay is subject to the members of the petitioners ensuring that the levy of service charge in addition to the price and taxes and obligation of customer to pay the same is duly and prominently displayed on the menu or other places.

Further, the members will also undertake not to levy service charge on any take-away items, it added.

“If you don’t want to pay, don’t enter the restaurant. It is ultimately a question of choice. I have stayed the para 7 guidelines subject to these two conditions,” the court said.

The court listed the matter for further hearing on November 25.

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