‘Violative of consumer rights’: Delhi HC on restaurants imposing service tax on food bills

The Central Consumer Protection Authority's (CCPA) guidelines, which forbid hotels and restaurants from automatically adding a "service charge" to meal bills, were maintained by the Delhi high court on Friday.

In order to prevent unfair commercial practices and violations of consumer rights with regard to the imposition of service charges, guidelines were released in July 2022. The forced imposition of a service charge is "a violation of consumer rights and the collection of service charge in various names amounts to unfair trade practices," according to the supreme court.

In 2022, the Federation of Hotels and Restaurant Associations of India (FHRAI) and the National Restaurant Association of India filed two separate petitions with the court, challenging CCPA guidelines that forbid hotels and restaurants from imposing mandatory service charges on food bills. The ruling was rendered by Justice Prathiba M. Singh, who also dismissed the petitions of restaurant bodies. The court further stated that "the registrants should not add the service charge mandatorily but must leave it to the consumer's discretion."