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HC stays guidelines prohibiting levying of service charge by restaurants



The Delhi High Court on July 20 stayed the recent guidelines issued by the Central Consumer Protection Authority (CCPA) banning restaurants and hotels across the country from levying service charge by adding it along with the food bill.

Justice Yashwant Varma gave the direction while hearing pleas by the National Restaurant Association of India (NRAI), Federation of Hotels and Restaurant Associations of India (FHRAI), restaurant owners and promoters against a July 4 guidelines issued by CCPA.

The high court said that CCPA’s guidelines, which effectively barred restaurants and hotels from adding service charge automatically or by default in the bill, will be kept in abeyance till November 25, the next date of hearing.

Meanwhile, the restaurants and hotels have to ensure that the levy of service charge in addition to the food bill and taxes and the obligation of customers to pay it must be displayed prominently on the menu, the high court ordered.

The high court further said that the restaurants and hotels will not levy or include service charge on any takeaway orders.

CCPA had said that its guidelines banning levy of service charge were meant to prevent unfair trade practices and protect consumer interest. CCPA had said it received many grievances on the National Consumer Helpline that restaurants and hotels are levying service charge in the bill by default, without informing consumers that paying such charge is voluntary and optional.

The association also argued service charge is being levied in various countries like the U.K., Singapore, Japan and the U.S. with varying percentages between 8% and 12.5%.

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