Delhi HC on service charge: 'If restaurants are worried about staff, increase salaries'

The Delhi High Court, while hearing the case related to the levying of service charges at restaurants, said if restaurants were worried about staff, they should increase salaries.

The court observed that the service charge may seem like a government levy for consumers. A common man can think that the service charge is mandated or levied by the government like a tax, it said.

The court also questioned whether consumers can be compelled to pay service charges. It also asked why restaurants are not considering other avenues like raising the salaries of employees. "Why can they raise prices, but not raise salaries," the court asked.

Last month, the Delhi High Court, while issuing notice on the petition challenging the guidelines, stayed the order issued by the Central Consumer Protection Authority (CCPA) restraining the levying of service charges by restaurants and hotels.

CCPA, which comes under the Union Ministry of Consumer Affairs, Food and Public Distribution, had then challenged this decision.

Meanwhile, restaurants argued that if customers agree to order food after seeing on the menu that a service charge will be levied, they then enter into a private contract with the restaurant.

The court questioned this approach, asking about those who are not familiar with the law and decide to walk in. The Delhi High Court asked, "Can consumers be compelled to pay a service charge?"

"Why don't restaurants increase prices? If restaurants are worried about staff, then increase salaries," the court said adding that the "common man may perceive it as government levy".

The Delhi High Court will now hear the case on August 18.

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.