Delhi HC rules restaurants can’t impose mandatory service charge in bills

The Delhi High Court has ruled that restaurants cannot impose a mandatory service charge on food bills, making it voluntary for customers. Justice Prathiba M Singh dismissed petitions filed by the Federation of Hotels and Restaurant Associations of India (FHRAI) and the National Restaurant Association of India (NRAI), challenging the Central Consumer Protection Authority (CCPA) guidelines prohibiting such charges. 

The court stated that mandatory service charges mislead consumers by appearing like taxes and amount to an unfair trade practice. It emphasized that consumers are free to tip staff voluntarily if they



choose. The court upheld the CCPA’s authority to issue guidelines and directed the petitioners to pay rupees 1 lakh each towards consumer welfare. It also ruled that consumer rights take precedence over restaurant interests. 

Meanwhile, Union Food and Consumer Affairs Minister Pralhad Joshi welcomed the Delhi High Court’s decision upholding CCPA guidelines that ban mandatory service charges in hotels and restaurants. In a social media post, He emphasized that service charges on food and beverage bills are voluntary, calling it a victory for consumers.