Can increase food price, why charge separately: Delhi HC to restaurants on service charge

Observing that a common man perceives a service charge by a restaurant as a government levy, the Delhi High Court on Tuesday said that an eatery can increase the food price instead of seeking it separately. However, the court has not passed any such direction at this stage and will hear the matter on Thursday.

The division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad made the observation during the hearing of Central Consumer Protection Authority (CCPA)’s appeal against the stay ordered on July 20 by a single bench on the guidelines prohibiting hotels and restaurants from adding service charge automatically or by default in the bill.

“That is what a common man perceives. Increase your food price, no problem, because you are entitled to fix a rate for your food but don’t levy it separately…,” said the court when the counsel representing the Federation of Hotel and Restaurant Associations of India submitted that nobody thinks of it as a government levy.

Additional Solicitor General Chetan Sharma, representing the CCPA, argued that they were served with the petition challenging the guidelines on July 19 and the order by single bench was passed a day later.

“It is being made to feel to the consumers as if this is a governmental levy or a governmental tax which it is not. The consumers face embarrassment when they don’t pay or are asked to pay, that is the reason hundreds of complaints were received. This [CCPA guideline] is totally consumer friendly,” submitted Sharma.

While addressing the counsel representing the Federation of Hotel and Restaurant Associations of India, Chief Justice Sharma asked about their “right to claim service charge,” to which the counsel submitted that the impugned guidelines do not prohibit service charge and “say please add it to the price of food but don’t charge separately”.

Justice Prasad asked whether a person can be compelled to pay any kind of service charge. “You are the master of your price but you can’t then place an additional price that you pay additional charge,” he added.

The counsel representing National Restaurant Association of India submitted that service charge is a matter of contract as it is made very clear on the menu card and displayed in restaurants that there will be a levy of service charge.

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