Why restaurants already charging more on MRP, levying service charges: Delhi High Court

New Delhi: When you are already charging more on MRP in the name of the experience, why are you then levying service charge, the Delhi High Court asked the restaurant association on Friday.

A bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela posed the query to the counsel representing the associations for hotels and restaurant, who moved court against a single judge's order.

The single judge of the high court in March held restaurants cannot mandatorily levy service charge on food bills in a "camouflaged and coercive" manner as it is against public interest and amounts to unfair trade practice.

The high court division bench on Friday said restaurants were charging the visitor under three components -- food items sold, providing ambience and serving.

"You (restaurants) are charging more than MRPs, for the experience being enjoyed by the person visiting your restaurant. And you’re also charging the service charges for the service rendered... providing an ambience for certain kind of experience will not include the services you’re providing? This we don’t understand," the bench said.

This service charge should include that also, the bench added.

The bench asked the counsel for the National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India (FHRAI) through an example that when the restaurants were charging Rs 100 for a Rs 20 water bottle, why the customer will have to pay an addition charge for the services it provides?

"And why are you quoting Rs 100 in your menu for Rs 20 rupee water bottle, without specifying that this 80 rupees extra is for the ambience you're providing? This can't be like this. This is an issue… Providing the ambience will form part of the services being provided by you... Can you charge any amount over and above the MRP? And for service you're charging, what's that 80 rupees for?" the bench asked.

On March 28 the order said collection of service charge was a "double whammy" for consumers who were forced to pay Goods and Services Tax on top of the service tax.

The court, while referring to consumer complaints and restaurant bills, said it was convinced that the service charge was being arbitrarily collected and coercively enforced and in such a situation it couldn't "be a mute spectator".