[Service Charge in restaurants] Delhi High Court asks CCPA to approach single-judge for vacation of stay on guidelines

A Division Bench of the Delhi High Court on Thursday asked the Central Consumer Protection Authority (CCPA) to approach a single-judge with an application for vacation of stay on its guidelines restraining hotels and restaurants from levying service charge [Central Consumer Protection Authority and Anr v. Federation of Hotels and Restaurant Associations of India and Ors & Anr]. .The Bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad asked the Registry to list the petition before a single-judge immediately after ten days. In the meantime, the CCPA will file its applications and replies to the petitions before the judge. .The Court was hearing an appeal by the CCPA challenging a single-judge’s order which stayed its guidelines stipulating that hotels and restaurants should not add service charge automatically or by default to food bills..Appearing for the the CCPA, Additional Solicitor General (ASG) Chetan Sharma argued that that the single-judge had violated the principles of natural justice while passing the order and that even he was not sure on some aspects.Sharma said that the Authority has received hundreds of complaints from consumers against restaurants.“They can price their food at any rate, but it is being felt by customers that this service charge is levied by the government and they feel embarrassed if they don’t pay it,” he said.ASG Sharma asked the Court to stay the interim order passed by the single-judge and then hear the matter further. .Counsel appearing for the restaurant associations informed the Court that the fact that a particular restaurant levies service charge is displayed prominently on their menus. Senior Advocate Kapil Sibal stated that the industry has been levying service charge for the last 70 years. He said that service charge goes to the employees and the restaurants not only pay Goods and Services Tax (GST) on it, but also Tax Deducted at Source (TDS) when the amount is distributed among staff. "Heavens are not going to fall if this is allowed to continued for the next few weeks, when this has been going on for the last 70 years," he said. .On July 20, a single-judge Bench of Justice Yashwant Varma had stayed the CCPA guidelines on the condition that restaurants prominently display the fact that they levy service charge. The Court had also recorded the undertaking by the restaurants that there will be no service charge on takeaway food orders. .[BREAKING] Delhi High Court stays restriction on levy of service charge by restaurants on food bills