It’s okay to levy service charge, but display it on the menu card: Delhi HC tells restaurant owners

Team L&M

In a huge relief to millions of anxious restaurant workers, the Delhi High Court yesterday okayed the restaurants levying service charges. It ordered a stay on Para 7 of the guidelines issued by the Central Consumer Protection Authority (CCPA) on July 4, 2022, which essentially banned the levy of Service Charge in any manner whatsoever. This was a huge blow to the Restaurant Employees because the Service Charge constitutes a significant part of their earnings.

It may be noted that in the same guidelines, the CCPA had also termed levying of Service Charge as an “Unfair Trade Practice”. Subsequently, the NRAI had filed a writ in the Delhi High Court, seeking clarification on the legality of these guidelines.

While allowing restaurants levying service charges, the Court has also directed that the information regarding levy of Service Charge should be displayed on menu cards and also otherwise displayed so that customer is aware of this charge. The Court also clarified that the Service Charge cannot be levied on any take away orders. The NRAI is very relieved with the passing of this order because it otherwise had a direct adverse impact on the human capital employed in the trade.

The NRAI has always asserted that there is nothing illegal in levying of Service Charge and it is a very transparent system. We are very glad that the Hon’ble Delhi High Court has upheld & confirmed this view.

The NRAI will soon send out advisories to all its member restaurants about the conditions spelled out by the Delhi High Court.