New Delhi: The Delhi High Court asked the restaurants and hotels affiliated with the Federation of Restaurants and Hotels Associations of India (FHRAI) to replace “service charge” with “satff contribution.”

Judge Prathiba Singh, who issued the order, made it clear that it was only a temporary order and not a final one. The judge also limited the employee contribution tax to 10% of the bill and required restaurants to mention the tax on their menu cards.

The final hearing on the case is scheduled on October 3. The order is limited to FHRAI members only and does not apply to members of associations such as the National Restaurant Association of India (NRAI).

The order was passed as the FHRAI and NRAI challenged Central Consumer Protection Agency (CCPA) guidelines, which prohibit restaurants from charging service fees. Chief Attorney Sandeep Sethi, who represents FHRAI, argued that service fees were a widely accepted practice and that the amount received would be divided among all staff in the restaurant.

He informed the court that a service fee is not charged for online delivery and is therefore not unfair. According to Sethi, if restaurants are not allowed to charge such a fee, the cost of food will increase and customers ordering online will also have to pay a service fee.

He added that there are more than 3,300 restaurants affiliated with FHRAI. When asked by the court if FHRAI was accrued to collect the same amount as an “satffcontribution”, Sethi replied by accepting the same.

However, NRAI, which has more than 1,000 affiliated restaurants, responded by saying it only wanted to collect them as a “service fee” and not under any other name.