Consumer Protection Authority challenges Delhi HC order on service charge at restaurants

Justice Yashwant Varma, while dealing with petitions by the NRAI and Federation of Hotels and Restaurant Associations of India challenging the CCPA's July 4 guidelines, said the issue requires consideration and directed the authorities to file their reply.

"The matter requires consideration. Consequently, until the next date of listing the directions as contained in para 7 of the impugned guideline of July 4, 2022, shall remain stayed," the court had ordered last month.

According to the CCPA's guidelines, hotels and restaurants were barred from levying service charge on customers. They were also barred from collecting service charge from consumers under any other name and nor were they allowed to force customers to pay it.

The CCPA, which was established under the Consumer Protection Act 2019, had issued the guidelines after taking note of many grievances registered on the NCH regarding restaurants and hotels levying service charge on consumers.

"Only after completing the meal, a consumer is in a position to assess the quality and service, and decide whether or not to pay tip or gratuity and if so, how much. The decision to pay time or gratuity by a consumer does not arise merely by entering the restaurant or placing an order. Therefore, service charge cannot be added in the bill involuntarily, without allowing consumers the choice or discretion to decide whether they want to pay such a charge or not," the CCPA had said in a statement that mentioned the guidelines.