The Delhi High Court on Tuesday said that restaurants could increase the prices of food instead of levying service charge to sustain their staff, The Indian Express reported.
A division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad made the oral observation while hearing a plea filed by the Central Consumer Protection Authority against a stay order barring restaurants from levying service charge on customers.
On July 4, the Central Consumer Protection Authority issued guidelines, which included a ban on levying service charge “automatically or by default” on food bills. The regulatory body governed by the consumer affairs ministry said that it was the duty of eateries to tell the customers that paying the service charge was voluntary.
However, on July 20, a single-judge bench of the Delhi High Court put a stay on the implementation of the guidelines based on a plea filed by the National Restaurant Association of India and the Federation of Hotels and Restaurant Associations of India.
The Central Consumer Protection Authority then challenged the stay order to a division bench of the High Court.
At Tuesday’s hearing, the counsel representing the restaurant bodies argued that the service charge was meant for restaurant employees.
To this, the court said, according to CNBC TV18: “Why don’t restaurants increase prices? If restaurants are worried about staff, then increase salaries.”
The court added that customers perceive service charge as a tax levied by the government, The Indian Express reported.
“The consumers face embarrassment when they don’t pay or are asked to pay [service charge]...Increase your food price, no problem, because you are entitled to fix a rate for your food but don’t levy it separately.”
The matter will again be heard on August 18.