The Delhi High Court has upheld the Central Consumer Protection Authority’s guidelines prohibiting hotels and restaurants from automatically imposing service charges. This ruling aims to protect consumer rights and promote fair trade practices in the hospitality industry. A social media influencer praised a restaurant’s no service charges policy, But his social media post backfired and left netizens in shock. 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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Consumers have the right to choose whether or not to pay a service charge. Mandatory service charges are considered unfair trade practices. The ruling reinforces the protection of consumer rights in the hospitality sector. Catch all the Business News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Business News News IndiaDelhi HC slams ‘unfair’ service charges levied by restaurants; ‘Can’t be mandatory,’ says the Court
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28 Mar 2025, 02:47 PM IST
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