'Consumer Wins': Union Minister Pralhad Joshi hails Delhi High Court ruling on service charge

New Delhi: Hailing the Delhi High Court ruling that upheld the Central Consumer Protection Authority (CCPA) guidelines prohibiting mandatory imposition of service charge, Union Minister Pralhad Joshi termed it a "victory for consumers."

In a social media post on X, the Food and Consumer Affairs Minister said, "Consumer Wins! The CCPA guidelines prohibiting mandatory imposition of service charges by hotels and restaurants have been upheld by the Delhi HC. The service charge on food & beverage bills are only voluntary in nature."

On Friday, the Delhi High Court held the payment of service charge on food bills was voluntary and restaurants couldn't impose it on customers. The court upheld the guidelines and imposed Rs 1 lakh cost each on the petitioners to be deposited with the CCPA towards consumer welfare.

Federation of Hotels and Restaurant Associations of India (FHRAI) and National Restaurant Association of India (NRAI) had moved the court in 2022 by filing two separate petitions.

Pronouncing the verdict, Justice Prathiba M Singh dismissed two petitions of the restaurant bodies challenging the Central Consumer Protection Authority (CCPA) guidelines prohibiting hotels and restaurants from mandatorily levying service charge on food bills.

The mandatory collection of service charge on food bills was violative of consumers' rights and contrary to law and consumers were not barred from tipping voluntarily if they wished to do so, the court held.

The court added the mandatory collection of service charge on food bills was "misleading" and "deceptive" as it gave an impression to the consumers that they were imposed in the form of service tax or GST.

Such a practice amounts to "unfair trade practice" and the amount cannot be mandatorily added in the bill, the court said.