India, March 29 -- The Delhi high court on Friday held that service charge and tips are payments made voluntarily by customers, barring restaurants and hotels from making it a mandatory factor on food bills.

Justice Prathiba M Singh dismissed two petitions filed by the Federation of Hotels and Restaurant Associations of India (FHRAI) and National Restaurant Association of India, challenging the 2022 guidelines of the Central Consumer Protection Authority (CCPA) prohibiting hotels and restaurants from automatically or by default levying service charges on food bills.

The high court observed that the imposition of a service charge in a compulsory manner is "violative of consumer rights and the collection of service charge in various names...