Delhi restaurants face action for refusing to refund service charges

In India, the Central Consumer Protection Authority (CCPA) has taken decisive action against five restaurants located in Delhi, which include Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation. This action came in response to the restaurants' failure to comply with a recent ruling by the Delhi High Court regarding mandatory service charges. The Delhi High Court emphasized that such service charges cannot be imposed without the explicit consent of the consumer, aligning with guidelines previously issued by the CCPA to protect consumer rights. On March 28, the Delhi High Court solidified these guidelines which outline that service charges should be optional and may not be added to bills automatically. The guidelines stress that any service charge must be communicated clearly as being voluntary, thereby ensuring that consumers have the right not to pay if they choose not to. Additionally, restaurants are prohibited from denying service to customers who refuse to pay such charges or from applying Goods and Services Tax (GST) on them. Following the court's backing, the CCPA issued notices to the five restaurants under the provisions of the Consumer Protection Act, 2019. These notices require them to refund any service charges that they have collected from customers without their consent. The CCPA aims to alleviate undue pressure on consumers dining out, reinforcing their rights and enabling a fairer dining experience. Established under Section 10 of the Consumer Protection Act, the CCPA is tasked with addressing violations related to consumer rights and ensuring that unfair trade practices do not affect the public interest. With this proactive approach, the CCPA is determined to hold businesses accountable and to promote transparency and fairness in provided services. By addressing the issue of service charges and the obligations of restaurants, the CCPA continues to advocate for consumer protection in India, reinforcing guidelines that support the autonomy and rights of consumers as consumers increasingly express dissatisfaction with automatic service charges. This action is seen as a significant step towards creating a more consumer-friendly environment in the restaurant industry, particularly in major cities like Delhi, where dining out is a popular activity. The CCPA's enforcement of these measures is crucial for consumers who are often left confused and pressured by additional charges that aren’t clearly communicated during the dining experience. Ultimately, this move could set a precedent for other regions in India, fostering a market that respects consumer choice and welfare.