Debangana Ray
Published on August 19, 2022 at 17:49 IST
A Division Bench of the Delhi HC had asked the Central Consumer Protection Authority (CCPA) to a single-judge bench for vacation of stay on its guidelines which prevent hotels and restaurants from levying service tax.
The Court was deliberating on an appeal by the CCPA challenging a single-judge’s order which stayed its guidelines which stated that hotels and restaurants should not levy service charges by default on bills.
According to the CCPA, the single-judge when passing the order had violated principles of natural justice .
The ASG opined that the Authority has received numerous complaints from customers against restaurants.
“They can price their food at any rate, but it is being felt by customers that this service charge is levied by the government and they feel embarrassed if they don’t pay it,” he stated.
ASG Sharma asked the Court to stay the interim order passed by the single-judge.
Senior Advocate Kapil Sibal stated that the industry has been levying service charges for the last 70 years. He said that the service charge goes to the employees, and the restaurants not only pay Tax Deducted at Source (TDS) on it but also Goods and Services Tax (GST) when the amount is distributed among staff.
In July, a Single-judge bench had stayed the CCPA guidelines under the condition that restaurants should explicitly state the fact that they levy service tax and state its amount.
The Court also contended that there would be no service charge on takeaway orders.