Delhi High Court on March 28 said that the ‘service charge’ levied by hotels and restaurants is an ‘unfair’ trade practice and that imposing it in a mandatory manner violates consumer rights.
The Court upheld the earlier guidelines issued by the Central Consumer Protection Authority (CCPA) which prohibited hotels and restaurants from automatically levying a ‘service charge’ on food bills.
The CCPA is empowered to issue directions to check such unfair practices, the Court said. “Service tax or tips is voluntary and can’t be mandatory,” a division bench of Justice Pratibha M Singh and Rajneesh Kumar said.
The CCPA guidelines were issued in July 2022 to prevent unfair trade practices and violation of consumer rights concerning levying service charge.
The collection of service charge in various names amounts to unfair trade practices.
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