The Central Consumer Protection Authority (CCPA) has taken suo moto action against five restaurants operating in the city for allegedly failing to refund service charges despite a recent judgment by the Delhi high court.
The authority has issued notices to Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation under the Consumer Protection Act, 2019. The action came following complaints on its consumer helpline portal, it said.
“It came to the notice of the CCPA, through complaints received on the National Consumer Helpline (1915), that grievances had been registered alleging that certain restaurants continued to impose a mandatory service charge without obtaining prior consent from consumers, thereby disregarding consumer rights and indulged in unfair trade practices as per the Consumer Protection Act, 2019,” the Union ministry of consumer affairs said in a statement on Monday.
CCPA officials said that the measure is aimed at reducing the undue pressure on consumers to pay additional amount at the time of availing services at restaurants or hotels — a contentious issue that has become a legal matter and is being strongly challenged by restaurant and hotel bodies.
“The Central Consumer Protection Authority (CCPA) has taken suo moto action against five restaurants — Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation for failing to refund mandatory service charges despite judgment held by Hon’ble High Court of Delhi,” the statement added.
CCPA in July 2022 issued guidelines to curb unfair trade practices and protect consumer interests regarding service charges in hotels and restaurants. In March this year, the Delhi high court upheld the CCPA guidelines on service charges. However, the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI) have appealed against the judgment and the matter continues to be sub judice. The HC is set to hear their pleas on May 9.
The guidelines issued by CCPA state that no hotels or restaurant will add service charge automatically or by default in the food bill; no collection of service charge will be done by any other name; no hotel or restaurant will force a consumer to pay service charge, and will inform the consumer that service charge is voluntary, optional and at consumer’s discretion. It added that no restriction on entry or provision of services will be based on collection of service charge, and the same will not be collected by adding it along with the food bill and levying GST on the total amount.
Restaurant associations, however, said that the situation remains fluid as the associations have appealed against the court order.
“Since the matter is sub judice and there is no final order yet, it remains a bit of grey area. So, in some cases restaurant owners are deciding to go ahead with the service charge, which in many cases is removed if the customers ask for it. NRAI, meanwhile, has appealed to all restaurants to not take service charge,” said Sandeep Goyale, Delhi chapter hear of NRAI.
Meanwhile, when contacted, Chaayos employees?? said that they do not impose service charge. However, there was no official response from the company. Other restaurants did not respond to HT’s queries for a comment.
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