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In a significant ruling favouring the consumers, the Delhi High Court recently ruled that the mandatory restaurant service charges mislead the customer to think its government levy.
The High Court bench of Justice Prathiba M Singh upheld the guidelines issued by the Central Consumer Protection Authority (CCPA).
The CCPA guidelines prohibit restaurants and hotels from automatically adding service charges to bills.
The judgement has been hailed as a significant victory for consumer rights.
Advocate Ashwini Dubey, Advocate-on-Record at the Supreme Court, called it a significant ruling of the Delhi HC.
He said: ‘The power to impose and collect taxes lies solely with the government and the court has now made it clear that the restaurants imposing service charges is beyond the scope of the law.’
He further said that this decision should be implemented in both letter and spirit.
Advocate Paras Jain, in an exclusive conversation with iTV network, said that that consumers had long been unfairly charged service fees.
He said: ‘For a very long time, Restaurants had been charging service charge from consumers in addition to the service tax. This service charge was being charged from consumers in the name of service provided by the staff of restaurants, though it was going into pocket of restaurants.’
He further said that a number of consumers approached consumers courts against this unfair trade practice of charging service charge by restaurants, but restaurants were still continuing this unfair trade practice.
He said: ‘Now, Delhi High Court has dismissed the plea of restuarant associations and upheld the legal validity of CCPA Guidelines.’
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