Delhi HC imposes Rs 1 lakh each on restaurant associations for non-compliance of service charge ban

The Delhi High Court has given a remaining likelihood to the Federation of Hotels and Restaurant Associations of India and the National Restaurant Association of India to file their affidavits, as per the order issued on April 12 relating to levy of service charge by their members.

However, this opportunity comes with a situation that they have to each pay a penalty of Rs. 1 lakh.

Both associations have did not adjust to the earlier order, main to finish non-compliance, and Justice Prathiba M. Singh has granted them a remaining alternative to submit the required affidavits inside 4 days.

Justice Singh stated that the penalty quantity needs to be paid to the Pay and Accounts Office, Department of Consumer Affairs, New Delhi, through a requirement draft.

The court docket additional stated that solely upon the cost of the penalty will their affidavits be thought of and accepted by the court docket. Failure to deposit the penalty will outcome within the affidavits not being taken into consideration.

Not proven on menu playing cards

On April 12, the excessive court docket had stated that its interim order staying the rules of Central Consumer Protection Authority (CCPA), that prohibit the lodges and eating places from levying service costs “robotically or by default” on payments, shall not be proven on the menu playing cards or show boards in a fashion to mislead the customers that the service charge has been accepted by the court docket.

The Federation of Hotels and Restaurant Associations of India and National Restaurant Association of India had challenged the CCPA’s guidelines launched on July 4 final 12 months, which the excessive court docket stayed later that month.

A co-ordinate bench had stayed the rules, whereas specifying that the service charge and obligation of the shopper to pay it should be “duly and prominently displayed on the menu or different locations”.

“It is clarified that the interim order shall not be proven within the show board or menu card in a fashion to mislead the patron that the service charge has been accepted by this court docket,” Justice Singh had stated.

Additional Solicitor General Chetan Sharma had submitted that numerous eating places are “misinterpreting the interim order” by utilizing it to provide legitimacy to levy of the service charge.

Both Associations have been ordered by Justice Singh to supply an affidavit stating the proportion of their members who’re requiring the service charge as a requirement on meal payments.

The court docket had additional said that the response should state whether or not the members would object if the time period “service charge” have been to get replaced with one other time period, equivalent to “workers welfare fund, workers welfare contribution, or workers costs”, so as to stop customers from assuming that the price is being levied by the federal government.

Mandatory or Voluntary?

“The affidavit shall additionally point out the proportion of members who’re keen to tell the customers that the service charge isn’t obligatory and so they can contribute voluntarily,” the court docket had stated.

“For a very long time, most of us thought that the service charge is being taken by the federal government. That is the place the issue is as a result of individuals suppose service charge is sort of a service tax. A client would not know the distinction between service tax, GST and so on. as a result of individuals suppose it’s being taken by the federal government. I’ve come throughout rather a lot of individuals who suppose like that,” the court docket had stated.

The Centre had earlier argued that the suggestions have been launched in one of the best pursuits of customers and urged the court docket to take the matter into consideration, together with its plea for the holiday of the keep order.

It had apprised the court docket that sure eating places have been at the moment relying on the interim order to create the picture that they’re permitted to impose service costs.

Justice Singh had stated that with out listening to the events, the interim order can’t be modified and added that the appliance for a trip of keep shall be considered if the primary case can’t be heard on the subsequent date.

Counsel showing for the petitioners had stated the service charge, which has been in existence for the final a number of years, is a “conventional charge” and is distributed amongst those that “should not earlier than the shoppers”, and eating places are searching for it after displaying due discover of the identical on their menu playing cards and of their premises. The petitioners had additional claimed that the CCPA’s order is bigoted, untenable and should be quashed.

(With inputs from IANS)