Service charge: Centre, CCPA seek vacation of HC stay

New Delhi: The Centre and the Central Consumer Protection Authority (CCPA) Wednesday told the Delhi High Court that hotels and restaurants were collecting service charge on food bills while openly flouting the guidelines banning the levy.

They claimed consumers were involuntarily paying service charge even when they were dissatisfied with the services.

The submissions were made by the authorities in their application seeking vacation of stay granted by the high court on the CCPA's July 4 guidelines prohibiting hotels and restaurants from levying service charge on food bills.

Justice Yashwant Varma was informed about the Centre and CCPA having also filed their counter affidavits in response to the petitions challenging the July 4 CCPA guidelines which have irked hotel and restaurant owners.

The court asked the counsel for the two authorities to bring the documents on record after which the petitioners - National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India may file their replies.

The court listed the matter for further hearing on October 6.

The single judge had on July 20 passed an interim order staying the guidelines. Thereafter, the Centre and CCPA had challenged the order before the division bench which asked the authorities to approach the single judge for appropriate relief.

The authorities contended in their vacation of stay plea they were not provided adequate time and opportunity to present their case and the interim order was passed post-haste.

They said due to this grave hardship has been caused to consumers at large who have been made to pay service charge mandatorily without there being any element of discretion on their part.

"It was noticed that restaurants and hotels were openly flouting the guidelines and collecting service charge from consumers involuntarily, even when they were dissatisfied with the services, the application said, adding that after the July guidelines were issued, 1105 more complaints were registered by consumers on the National Consumer Helpline about unfair levy of service charge by hotels and restaurants.

The plea said the guidelines have been issued for safeguarding the rights and interests of consumers and seek to protect them from unfair trade practices and violation of consumer rights due to mandatory collection of service charge.

It said service charge was added automatically or by default in the food bill without allowing consumers the choice or discretion to decide whether they want to pay or not.

It insisted the guidelines do not interfere with the right of restaurants or hotels to set the prices at which they want to offer their food and services to consumers which they are free to decide.