August 22, 2025

The Delhi High Court served a tough warning to restaurants on Friday. Why, the judges asked, do you charge more than the MRP for food and ambiance, and then add a separate service charge? This puzzling practice got the court’s sharp eye as it heard from the National Restaurant Association of India (NRAI) and the Federation of Hotels and Restaurant Associations of India (FHRAI). A single judge had already ruled in March that forcing customers to pay mandatory service charges was unfair and against public interest. The division bench, made up of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, agreed with that view. The judges pointed out that restaurants are charging customers in three ways: the food price, the ambiance experience, and the service. "You are charging more than MRPs, for the experience being enjoyed by the person visiting your restaurant. And you’re also charging the service charges for the service rendered... providing an ambience for certain kind of experience will not include the services you’re providing? This we don’t understand," the bench said. They asked a simple but sharp question: If a bottle of water has an MRP of Rs 20 but is priced at Rs 100 on the menu, why should the customer pay extra service charges? And if Rs 80 is the extra cost for ambiance and service, why is it not clearly marked? "This can’t be like this. This is an issue... Providing the ambience will form part of the services being provided by you... Can you charge any amount over and above the MRP? And for service you’re charging, what’s that 80 rupees for?" the bench demanded. The court also highlighted that consumers face a "double whammy" – paying service charge and then GST on top of it. Observing from real consumer complaints and restaurant bills, the court said the service charge is being “arbitrarily collected and coercively enforced” and it can’t just “be a mute spectator.” This fiery session from the Delhi High Court hints at a big change in how restaurants bill their customers. For diners, it might soon mean clearer pricing, no hidden fees, and a fairer experience overall.

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Tags: Delhi high court, Service charge, Restaurants, Nrai, Fhrai, Mrp,