The Delhi High Court on Wednesday stayed a Central Consumer Protection Authority order that barred hotels and restaurants from adding a service charge to food bills, Live Law reported.
On July 4, the consumer protection watchdog had said the charge, typically added to bills by restaurants in lieu of a tip, was an unfair trade practice. The watchdog had said restaurants cannot force the customers to pay the service charge.
The National Restaurant Association of India and the Federation of Hotels and Restaurant Associations of India had challenged the order, PTI reported.
In its plea, the National Restaurant Association of India, which represents over 5,00,000 restaurants, had said that the July 4 order was arbitrary, untenable and needs to be quashed as it has been issued without “appreciation of the facts and circumstances”.
At Wednesday’s hearing, Justice Yashwant Varma ordered that all restaurants and hotels must prominently display the service charge on menus and other places.
The judge recorded a submission by the counsels representing the restaurants that they will not levy a service charge on takeaway food orders.
“If you don’t want to pay, don’t enter the restaurant,” the High Court said. “It is ultimately a question of choice.”
The Delhi High Court has asked the respondents to file their reply. It will hear the matter next on November 25.
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