Delhi HC Stays Guidelines That Barred Levy Of Service Charge By Hotels And Restaurants

Justice Yashwant Varma, while hearing the petitions by NRAI and Federation of Hotels and Restaurant Associations of India challenging the CCPA’s July 4 guidelines, said the issue needs consideration

The NRAI has claimed in the petition that the prohibition under the July 4 order was arbitrary, untenable, and ought to be quashed as it has been issued without appreciation of the facts and circumstances.

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The recent guidelines prohibiting hotels and restaurants from levying service charge automatically on food bills by the central government was stayed by the Delhi High Court (HC) on Wednesday, the PTI reported.

According to the report, Justice Yashwant Varma, while hearing the petitions by the National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India challenging the Central Consumer Protection Authority (CCPA)’s July 4 guidelines, said the issue needs consideration. Justice Verma also directed the authorities to file their reply.

The high court in its order mentioned that the matter requires consideration. Consequently, until the next date of listing the directions as contained in para 7 of the impugned guideline of July 4, 2022 shall remain stayed, the court said.

According to the guidelines, “No hotels or restaurants shall add service charge automatically or by default in the bill.” There should not be any collection of service charge by any other name, the CCPA said, while adding, “No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.”

The high court listed the matter for further hearing on November 25.

The court said that the stay is subject to the members of the petitioners ensuring that the levy of service charge in addition to the price and taxes and obligation of customer to pay the same is duly and prominently displayed on the menu or other places. The members will also undertake not to levy service charge on any take-away items, it added.

"If you don't want to pay, don't enter the restaurant. It is ultimately a question of choice. I have stayed the para 7 guidelines subject to these two conditions," the court said.

The NRAI has claimed in the petition that the prohibition under the July 4 order was arbitrary, untenable, and ought to be quashed as it has been issued without appreciation of the facts and circumstances.