Eatery Service Charge Row: CCPA Moves Appeal Against Delhi HC's Stay on Guidelines

The Central Consumer Protection Authority (CCPA) has moved an appeal in the Delhi High Court challenging the July 20 order that stayed the former’s new guidelines restraining restaurants from adding a service charge by default to food bills.

The appeal would be taken up before the Chief Justice-headed division bench on August 16.

The stay of the fresh guidelines of the country’s consumer watchdog on July 20 was following the challenging plea of the National Restaurant Association of India (NRAI).

In the last hearing, Justice Yashwant Varma remarked, “Don’t pay. Don’t enter the restaurant. It’s a matter of choice.”

Granting the stay, the court has also directed that the information regarding the levy of Service Charge should be displayed on menu cards and also otherwise displayed so that customers are aware of this charge.

Importantly, the court also clarified that the Service Charge cannot be levied on any takeaway orders. NRAI is relieved with the passing of this order because it otherwise had a direct adverse impact on the human capital employed in the trade.

In its response to the verdict, the NRAI said 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.

“The levying of service charge is a matter of contract and decision of the management. The levying of service charge is displayed at various places in the restaurant. The same is also displayed on the menu cards of the restaurants. Once the customer places the order after being made aware of the terms and conditions there comes into existence a binding contract. No authority can interfere with the binding nature of a valid contract until and unless it is shown and proved to be unconscionable or is an unfair trade practice,” it stated.

The Central Consumer Protection Authority (CCPA), which comes under the Ministry of Consumer Affairs, has issued guidelines for preventing unfair trade practices and violation of consumer rights with regard to the hotels and restaurants levying service charge, stating that the consumer may lodge a complaint with the National Consumer Helpline (NCH) against such practice.

The CCPA said that the consumer may make a request to the concerned hotel or restaurant to remove service charge from the bill amount. The consumer may also file a complaint against unfair trade practices with the Consumer Commission.

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