Restaurant Service Charges: A Legal Tug-of-War

The National Restaurants Association of India (NRAI) is challenging the Delhi High Court's ruling that deemed mandatory restaurant service charges unfair. The single judge upheld consumer rights, dismissing industry pleas and imposing fines. NRAI argues that service charges are contractual and questions the CCPA's jurisdiction over pricing policies.

In a significant legal battle, the Delhi High Court is facing an appeal from the National Restaurants Association of India (NRAI) against its earlier decision that prohibits mandatory service charges in restaurants. The initial ruling found such a levy detrimental to public interest and consumer welfare.

The court's single judge stated that enforced service charges, alongside Goods and Services Tax, exemplify an exploitative 'double whammy' for consumers, upholding the Central Consumer Protection Authority (CCPA) guidelines. The guidelines mandate that service charges should not be compulsory, with any violation leading to penalties.

The NRAI argues that service charges, if clearly listed on menus, constitute a legitimate contractual agreement. In its appeal, it questions whether the CCPA holds jurisdiction to regulate pricing structures and whether service charges can be considered an anti-consumer practice under existing laws.

(With inputs from agencies.)