Shillong, July 28: The Delhi High Court has given the Federation of Hotels and Restaurant Associations of India and the National Restaurant Association of India a last opportunity to file their affidavits regarding the levy of service charges by their members. However, to avail of this chance, each association must pay a penalty of Rs. 1 lakh.
Both associations had failed to comply with the court’s previous order, leading to complete non-compliance. Justice Prathiba M. Singh has granted them four days to submit the required affidavits, but only upon payment of the penalty. The penalty amount should be paid to the Pay and Accounts Office, Department of Consumer Affairs, New Delhi, via a demand draft. Failure to pay the penalty will result in the affidavits not being accepted.
IANS stated that the high court’s interim order staying the guidelines of the Central Consumer Protection Authority (CCPA), which prohibited hotels and restaurants from levying service charges “automatically or by default” on bills, had been stayed and specified that the service charge and the customer’s obligation to pay it must be “duly and prominently displayed on the menu or other places.”
The associations had challenged the CCPA’s rules, released on July 4 the previous year, which were later stayed by the high court. The court had directed them to provide an affidavit stating the proportion of their members requiring the service charge and whether they would object to replacing the term “service charge” with another term to prevent consumer confusion.
The court emphasized that consumers often misunderstand service charges, assuming they are akin to government-imposed taxes like service tax or GST. The Centre argued that the recommendations were in consumers’ best interests and requested the vacation of the stay order, as some restaurants were misinterpreting the interim order to impose service charges.
