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Synopsis

The bench of Justice Yashwant Varma of Delhi High Court has stayed the Ministry of Consumer Affairs guidelines prohibiting hotels and restaurants from levying service charge on bills.

The above order was passed in petitions filed by the National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India challenging the Central Consumer Protection Authority (CCPA)' guidelines.

The single-judge bench, while passing the interim order, directed that the information that the restaurant levies service charge must be displayed prominently for the knowledge of the customers. The bench, further, remarked that the customers have a choice to not go to a restaurant if they do not wish to pay the service charge.

Observing that the matter requires consideration, the bench asked the respondents to file a reply to the plea. Court has further ordered the restaurants to ensure that service charge is not levied on takeaway orders and took note of the undertaking for it by the members of NRAI.

The guidelines by CCPA from July 4, 2022 stipulate that restaurants or hotels cannot automatically levy service charge on food bills. It further stipulate that the objective behind the provision is to prevent violation of consumer rights.

According to the guidelines, service charge cannot be levied under any other name either and customers cannot be forced to pay the same. Service charge is voluntary and may be paid at discretion by the customer and the same shall be informed to restaurant-goers, the guidelines stipulate.

Case title: NRAI Vs Union of India