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HIGH COURT OF DELHI
NATIONAL RESTAURANT ASSOCIATION OF INDIA & ORS. – Appellant
Versus
UNION OF INDIA & ANR. – Respondent
JUDGMENT :
PRATHIBA M. SINGH, J.
1. This hearing has been done through hybrid mode.
2. Whether the collection of mandatory Service Charge by restaurants and other establishments is permissible under the Consumer Protection Act, 2019 (hereinafter the ‘CPA 2019’)?
Background:
3. The Central Consumer Protection Authority (‘CCPA’) established under Section 10 of the CPA, 2019 received several complaints regarding restaurants and hotels (hereinafter, the ‘restaurant establishments’) charging ‘Service Charge’ over and above the cost of the food items. This Charge in the range of 5-20% in lieu of ‘Tip’ or ‘Gratuity’ was being collected from consumers on a compulsory basis. In addition, Goods and Services Tax (‘GST’) was charged on the said service charge, resulting in substantial burden consumers. The CCPA then issued guidelines to prevent unfair trade practices and protect consumer interest with regard to levying of service charge, on 4th July, 2022. The same are extracted hereinbelow for ready reference:
“3. It has come to the notice of the CCPA through many grievances registered on the National Consumer Helpline that restaurants and hotels are levying service charge in the bill by default, w
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