Food Service Charge: Restaurants can no longer charge mandatory service charge in food bills. The Delhi High Court on Friday (March 28) upheld the guidelines issued by the Central Consumer Protection Authority (CCPA) in 2022.
This guideline states that hotels and restaurants cannot add automatic or default service charge to the food bill. Justice Pratibha M Singh has also imposed a fine of Rs 1 lakh on the restaurant association challenging the guidelines.
Food Service Charge: The guidelines were stayed by the High Court on 20 July 2022
This order was passed on the petitions of the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI).
These guidelines were stayed by the High Court on 20 July 2022. The CCPA had issued guidelines with the aim of preventing unfair trade practices and violation of consumer rights.
There is no law that prevents restaurants from levying service charge: NRAI
The NRAI petition states that there is no law that prevents restaurants from levying service charge. And no such amendment has been made in the existing law which makes levying service charge illegal. The petitioner-association argued that the guidelines are arbitrary, unstable and should be repealed.
NRAI was represented by advocates Lalit Bhasin, Neena Gupta, Ananya Marwah, Devvrat Tiwari and Ajay Pratap Singh of Bhasin & Co. FHRAI was represented by advocates Sameer Parekh, Sumit Goyal, Sonal Gupta, Swati Bhardwaj and Abhishek Thakral.
Union of India was represented by Central Government’s Standing Council Sandeep Mahapatra and Ashish Dixit along with advocates Abhinav Bansal, Vikramaditya Singh Tribhuvan, Shubham Sharma, Amit Gupta, Ishan Malhotra, Chandan, Deepak Tanwar and Shivam Tiwari.
What is service charge?
When you buy a product or service, you have to pay some money for it. This is called service charge. That is, service charge is taken from the customer for serving food and other services in a hotel or restaurant.
Customers also make payment with service charge from the hotel or restaurant without asking any questions. However, this charge is taken at the time of transaction only, not at the time of taking the service.
Food Service Charge: Service charge is collected as some percentage of the bill
Service charge is written at the bottom of your hotel or restaurant bill. It can usually be some percentage of your bill. Mostly it is 5%. That is, if your bill is Rs 1,000 then this 5% service charge will become Rs 1,050.
