Delhi High Court Stays Guidelines Prohibiting Hotels Charging Service Tax

The Delhi High Court has put on hold the recent guidelines prohibiting hotels and restaurants from levying service charge automatically on food bills.

Justice Yashwant Varma, while dealing with petitions by the National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India challenging the Central Consumer Protection Authority (CCPA)'s July 4 guidelines, said the issue requires consideration and directed the authorities to file their reply.

"The matter requires consideration. Consequently, until the next date of listing the directions as contained in para 7 of the impugned guideline of July 4, 2022 shall remain stayed," the court ordered.

The court said that the stay is subject to the members of the petitioners ensuring that the levy of service charge in addition to the price and taxes and obligation of customer to pay the same is duly and prominently displayed on the menu or other places.

Further, the members will also undertake not to levy service charge on any take-away items, it added.

"If you don't want to pay, don't enter the restaurant. It is ultimately a question of choice. I have stayed the para 7 guidelines subject to these two conditions," the court said.

The court listed the matter for further hearing on November 25.

The NRAI has claimed in the petition that the prohibition under the July 4 order was "arbitrary, untenable and ought to be quashed" as it has been issued without appreciation of the facts and circumstances.
 

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