Restaurants will no longer be able to levy mandatory service fee in the food bill. The Delhi High Court upheld the guidelines issued by the Central Consumer Protection Authority (CCPA) in 2022. This guideline states that hotels and restaurants cannot add automatic or default service fee to the dining bill. Justice Pratibha M Singh has also imposed a fine of one lakh rupees on the restaurant association challenging the guidelines.

On 20 July 2022, the High Court stayed guidelines

The order was passed on the petitions of the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Association of India (FHRAI).

On these guidelines, the High Court had stayed 20 July 2022. The CCPA issued guidelines aimed at preventing unfair trade practices and violations of consumer rights.

There is no law that prevents restaurant from imposing service charge: NRAI

NRAI's petition states that there is no law that prevents restaurants from imposing service charge. And no such amendment has been made in the current law which makes the service charge illegal. The petitioner-association argued that the guidelines are arbitrary, unstable and should be canceled.

NRAI was represented by advocate Lalit Bhasin, Nina Gupta, Ananya Marwah, Devvrat Tiwari and Ajay Pratap Singh of Bhasin & Company. FHRAI was represented by advocates Sameer Parekh, Sumit Goyal, Sonal Gupta, Swati Bhardwaj and Abhishek Thakral.

On the other hand, the Union of India was represented by the Central Government's permanent lawyers Sandeep Mahapatra and Ashish Dixit, along with advocates Abhinav Bansal, Vikramaditya Singh Tribhuvan, Shubham Sharma, Amit Gupta, Ishaan Malhotra, Chandan, Deepak Tanwar and Shivam Tiwari.

What is the service fee?

When you buy a product or service, you have to pay some money for it. This is called service charge. That is, service charge is taken from the customer for serving food in the hotel or restaurant and for other services.

Customers also pay the hotel or restaurant with service charge without asking any questions. However, this charge is taken at the time of transaction, not while taking service.

Service charge is charged as a few percent of the bill

The service charge is written under the bill of your hotel or restaurant. This can usually be a few percent of your bill. Mostly it is 5%. That is, if your bill is Rs 1,000, then this 5% service charge will be Rs 1,050.