The Central Consumer Protection Authority (CCPA) on July 4 barred hotels and restaurants from levying service charges on customers and issued guidelines in this regard to prevent unfair trade practices and protect the interest of consumers.
The CCPA, which was established under the Consumer Protection Act 2019, issued the guidelines after taking note of many grievances registered on the National Consumer Helpline (NCH) regarding restaurants and hotels levying service charges on consumers.
However, the National Restaurant Association of India (NRAI) has raised issues with the enforceability of these guidelines. NRAI says guidelines are only for guidance and removing service charges will require alteration of the current legal framework.
The association said CCPA did not issue any notice and there were no hearings or industry submissions that raise the question of natural justice.
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In an interview with CNBC-TV18, Vaibhav Gaggar, a Supreme Court advocate, said guidelines are persuasive and are not treated as binding legislation or rule.
"However, if someone approaches a consumer forum and says irrespective of the guideline, this was an unfair trade practice and the guideline reinforces that fact and the hotels are still continuing with it, then there could be a bit of a problem for the restaurant associations," Gaggar said.
He said, "Even at the general level, district courts have held that service charges could be an unfair trade practice. So the restaurant associations may win the war but may lose the battle if they stick to the guidelines point."
Watch the video for more.
