Understanding Service Charges in Hotels: What You Need to Know

The Delhi High Court has clarified that its interim order staying the guidelines of the CCPA, which prohibits hotels and restaurants from automatically levying service charges on bills, must not be displayed on menu cards or display boards in a manner that misleads consumers. The court has ordered that the service charge and obligation to pay it must be prominently displayed on menus or elsewhere. Justice Singh has also ordered restaurant associations to produce an affidavit stating the proportion of their members requiring service charges and whether they would object to using other terms, such as “staff welfare fund”. The matter is listed for the next hearing on July 24. The court noted that many consumers assume the service charge is a government tax and called for greater clarity. The Centre argued that its recommendations were in consumers’ best interests and urged the court to vacate the stay order.