The Delhi high court on Wednesday stayed the recent guidelines prohibiting hotels and restaurants from levying service charges automatically on food bills. Justice Yashwant Varma, while dealing with petitions by the National RestaurantAssociation 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 requires consideration and directed the authority to file its reply. Justice Varma, however, said the fact that particular restaurant levies such charges should be displayed prominently on the menus.
The court also recorded the undertaking by the restaurants that there will be no service charge on take-away food orders. The court sought responses from the respondent and posted the case for hearing next on November 25. “If you don’t want to pay don’t enter the restaurant. It is essentially a matter of choice,” the Court orally remarked as the hearing drew to a close. Analysts said this observation needs the clarity of the court. “Not enough clarity, but the court has stayed the CCPAorder which means its status quo as before…Hotels and restaurants can levy service charges with the caveat that the information is clearly mentioned on the menu and in the premises and that it is voluntary for guests to pay and not mandatory,” Mandeep S Lamba, HVS Anarock president told The Telegraph.
The NRAI said it “is very relieved with the passing of this order because it otherwise had a direct adverse impact on the human capital employed in the trade. It has always been steadfast in its assertion that there is nothing illegal in levying of Service Charge and it is a very transparent system. Weare very glad that the Hon’bleDelhi High Court has upheld &confirmed this view.” “It is entirely the prerogative of a hotel or a restaurant to decide on the structure of the menu and its pricing, to best suit the business model. We are glad that our employees shall continue to avail ofagreed benefits under ServiceCharge,” Gurbaxish SinghKohli, vice-president, FHRAIsaid.
