Delhi HC questions eateries on service charge: ‘Why Rs 100 for a water bottle?’
The court was hearing a plea against a single judge's order from March that called the collection of service charges a 'double whammy' for consumers
The Delhi High Court slammed restaurants' associations on Friday (August 22), questioning them over eateries levying charges for service and ambience. It asked why providing an ambience is not considered a service.
A bench, consisting of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, asked the associations why they are levying service charges when they already charge more on MRP in the name of experience.
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Why two different charges?
The bench said "restaurants are charging more than MRPs for the experience being enjoyed by the person visiting restaurants".
"And you’re (restaurants) also charging the service charges for the service rendered. Providing an ambience for an experience will not include the services you’re providing? This is something we don't understand," the court said, adding that "this service charge should include that also".
The bench gave an example: “When the restaurants are charging Rs 100 for a Rs 20 water bottle, why would the customer have to pay an additional charge for the services they provide? And why are restaurants not specifying that the additional Rs 80 is for the ambience?” The bench pointed it out as an issue.
“Providing the ambience will form part of the services you provide. Can you charge any amount over and above the MRP? And for the service you're charging, what's that 80 rupees for?" the bench asked.
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Unfair hidden charges
The bench’s observation came while hearing a plea filed by the National Restaurant Association of India (NRAI) and the Federation of Hotels and Restaurant Associations of India (FHRAI), against a single judge's order in March.
In March, the single judge had held that restaurants cannot mandatorily levy service charge on bills in a "camouflaged and coercive" manner and cited that it is against public interest and called it “unfair trade practice”.
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 in such a situation, it couldn't "be a mute spectator".