The Delhi High Court on Thursday allowed restaurants to continue to levy service charges till the next hearing on the appeal filed by the Central Consumer Protection Authority (CCPA) over the HC’s decision to put a stay on the ban on service charges at eateries.
The court has agreed to list the case concerning the government’s guidelines barring levy of service charge by restaurants on 31 August.
A high court division bench was hearing an appeal filed by the CCPA challenging an interim order passed by a single-judge bench that stayed the guidelines concerning service charge.
It also said that the restaurants are bound by law to pay their employees and cannot make customers liable for it.
Delhi HC issues notice to restaurant bodies
The court has also issued a notice to restaurant bodies, including The Federation of Hotel and Restaurant Associations of India (FHRI) and the National Restaurant Association of India (NHRI), based on the appeal filed by the CCPA.
Earlier on Tuesday, the Delhi HC had questioned why restaurants should recover service charges from consumers as an “additional” and “separate levy.”
A bench headed by Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad had remarked that a common man perceives service charge as a government levy and restaurants can increase their food prices to absorb this charge instead of recovering it in the form of an additional charge over and above the total bill.
Generally, restaurants and hotels levy a service charge of 10% on the food bill. The guidelines said there should not be any collection of service charges by any other name.
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