On Wednesday, the Delhi high court requested the National Restaurant Association of India and Federation of Hotels and Restaurant Associations to contemplate renaming the term “service charge” to an alternative term, such as “staff welfare charges,” in order to avoid misleading consumers into thinking that it is a government tax.
Furthermore, Justice Pratibha Singh instructed hotels and restaurants not to display on their menus that the service charge imposed has been authorized by the high court, following a protest by the central government.
The associations were also urged to hold a meeting to determine the number of members who are willing to inform their customers that the service charge is optional and to pass a resolution on the percentage of members who enforce service charges on their bills. An affidavit containing all of this information must be submitted to the court by July 24, the next scheduled hearing date.
The Delhi high court has issued a stay on the Central Consumer Protection Authority’s July 4 prohibition on imposing service charges unilaterally.