delhi HC takes tough stand against service charges
New Delhi, Aug. 23 -- The Delhi High Court on Friday questioned the legality of restaurants charging customers beyond the maximum retail price (MRP) of goods under the pretext of ambience or a premium dining experience, in addition to levying service charges.
The observation came after senior advocate Sandeep Sethi, representing the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI), defended the practice before a bench of chief justice DK Upadhyay and Justice Tushar Rao Gedela. He argued that charges above MRP were justified on account of the ambience and overall experience provided to customers.
The bench, however, expressed strong reservations.
"Apart from MRP, you're charging some extra amount for the goods sold and in addition to that you are charging service charge. Under the Legal Metrology Act, none is empowered to sell an item over and above the MRP, and you say you are charging it for the experience. You're charging service charges for what? Whether providing an ambience will not be included in the services you are providing?" the court asked Sethi.
To illustrate its point, the bench cited the example of a water bottle priced at Rs.20 MRP being billed at Rs.100 in a restaurant - broken down as Rs.80 for ambience and Rs.10 as service charge. "In your menu, why do you quote Rs.100 for a Rs.20 bottle without specifying that Rs.80 is for ambience? It cannot be like this. Rs.20 is the MRP, Rs.80 for ambience and Rs.10 as service charge. Should ambience not be a part of the service charge? If you can't sell over and above the MRP, what are you charging Rs.80 for?" the court asked....
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