Service charge can stand for now, Delhi HC seeks restaurants’ stance on CCPA appeal

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Service charge line: Restaurants can levy service charges on customers at the moment, the Delhi High Court has said. The HC also asked for the position of catering organizations on the appeal lodged by the Central Consumer Protection Authority.

The Delhi High Court was hearing a plea from the Central Consumer Protection Authority or CCPA earlier today. The CCPA said the collection of service fees is an important issue for consumers and that a detailed hearing is needed. To this, the high court asked for the restaurant bodies’ response and said restaurants can charge customers for the time being, before posting the case for a rehearing on August 31.

The High Court’s comments came after restaurants joked on August 16 about charging a service charge. “Can consumers be forced to pay service fees? the high court joked as it urged restaurants to raise wages if restaurants were worried about their staff. The Delhi HC had also compared the service charge levied to that of a government tax.

The HC observations came after the CCAC moved the HC Divisional Bench from Delhi against levy of service charge. On Aug. 16, he asked the CCPA about consumers being forced to pay service charges and asked why restaurants that are worried about their employees can’t raise prices and wages instead of charging a fee. of service, adding that “the common man can levy a service charge as a government levy.

On July 20, the High Court suspended CCPA guidelines prohibiting restaurants from charging service charges. The suspension of new guidelines from the country’s consumer watchdog on July 20 came after provocative advocacy by the National Restaurant Association of India (NRAI). Following this, the CCPA seized the High Court to challenge the decision. A divisional bench headed by Chief Justice of Delhi HC Satish Chandra Sharma and Justice Subramonium Prasad is currently conducting the hearing on the matter.

At the last hearing, Judge Yashwant Varma said, “Don’t pay. Do not enter the restaurant. It’s a question of choice. »

However, the chief justice-led bench questioned catering bodies about charging default service charges on top of food bills. He previously observed that service charges were “very consumer-related”.

On July 4, the CCPA released guidelines stating that hotels or restaurants should not add a service charge automatically or by default to the food bill. “No collection of service charges will be made by any other name. No hotel or restaurant shall force a consumer to pay a service charge and shall clearly inform the consumer that the service charge is voluntary, optional and at the discretion of the consumer,” he said.

“No restrictions on entry or provision of services based on the collection of service charges will be imposed on consumers. Service charges will not be collected by adding them to the food bill and levying GST on the full amount,” the guidelines added.

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