Delhi High Court Questions Legality of Service Charges in Restaurants
The Delhi High Court has raised significant questions over the legality of restaurants charging customers beyond the Maximum Retail Price (MRP) of goods under the guise of ambience costs and service charges. The observations came during hearings on appeals filed by the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI) challenging earlier court orders restricting automatic service charges. Court Observations: Charging Beyond MRP Under Scrutiny A division bench of Chief Justice D.K. Upadhyay and Justice Tushar Rao Gedela expressed strong reservations about the practice of levying extra charges on goods, citing the Legal Metrology Act , which prohibits selling items above their declared MRP. To drive the point home, the bench presented a striking illustration: A ₹20 MRP water bottle billed at ₹100 in a restaurant, broken down as ₹80 for ambience and ₹10 as service charge. The Court questioned the leg...