CCPA to challenge Delhi HC stay on service charge norms for hotels

Guidelines prohibit levy of service charge on food bills

The Central Consumer Protection Authority (CCPA) on Wednesday said it will challenge the Delhi High Court’s decision to stay the recent guidelines issued by the government, prohibiting restaurants and hotels from levying service charge on food bills.

The CCPA is also expected to soon start a nationwide crackdown on fake household products. Household products had come under quality control guidelines that were never implemented. These products include daily-use items such as geysers, refrigerators and water heating rods.

It is also taking action against coaching centres and institutes that mislead consumers by publicising names of meritorious students.

On the high court’s order on service charge, CCPA chief commissioner Nidhi Khare said the court has stayed the guidelines of July 4, related to service charge. The matter is listed for further hearing on November 25.

“We are going to challenge the order. We are examining and will take appropriate steps so that we are heard,” Khare told reporters.

Hearing a petition filed by the National Restaurant Association of India (NRAI) and Federation and Restaurant Associations of India that challenged the July 4 guidelines, the high court on July 20 ordered a stay.

Justice Yashwant Varma, while hearing the petition, had said the issue requires consideration. He directed the CCPA to file its reply and listed the matter for further hearing on November 25.

The July 4 guidelines — issued by the CCPA — barred hotels and restaurants from levying service charges automatically or by default in food bills. It allowed customers to file complaints in case of violation.

Restaurants and hotels generally levy a service charge of 10 per cent on the food bill. The guidelines said there should not be any collection of service charges by any other name.

Khare said after the guidelines on service charge, which created a nationwide furore, there have been instances where hotel and restaurant owners have voluntarily stopped levying service charge. Also, consumers themselves have become a lot more aware about this.

She said the authority is also in the process of coming up with guidelines against fake reviews and fake endorsements, which several companies indulge in. These are done to increase visibility in social media and public platforms.