Service charge case: Delhi HC slaps ₹1 lakh penalty on restaurant bodies

economictimes.indiatimes.com:

Delhi High Court has imposed a cost of ₹1 lakh each on the National Restaurant Association of India and the Federation of Hotel and Restaurant Associations of India for failing to comply with its April directions in a case related to levy of service charge on food bills. While hearing the petitions by the hotel bodies challenging the Central Consumer Protection Authority's July 4 last year's guidelines that imposed a ban on adding service charge unilaterally, Justice Pratibha M Singh said that «the clear impression» that the court gets is that the hotel bodies were in complete non-compliance of its April 12 order as they had filed the affidavits without serving them on the government properly so as to ensure that the hearing did not proceed before it.

«Accordingly, one last opportunity is granted to the petitioners to properly file these affidavits within four days subject to payment of ₹1 lakh as costs in each of the petitions» which shall be paid to the department of consumer affairs, the HC said, adding that «without the cost being deposited, the affidavits shall not be taken on record». The matter will be further heard on September 5.

The HC had asked the hotel bodies to consider changing the «service charge» terminology to an alternate term like «staff welfare charges» so that consumers were not misled into believing it to be a government tax. It had also asked the associations to convene a meeting and pass a resolution on the percentage of its members who were willing to inform consumers that the service charge was not mandatory.