Delhi High Court Questions Inflated Menu Rates And Service Charges In Restaurants

The Delhi High Court on Friday took a sharp dig at restaurants and hotels for their billing practices, questioning why customers are made to pay both inflated menu prices and an additional service charge. The bench said that if restaurants are already selling a ₹20 water bottle for ₹100 in the name of ambience, what exactly is the service charge for?

Delhi High Court On Service Charge

According to Money Control, the court made it clear that ambience, hospitality, and the overall “experience” are already baked into the price of a meal and cannot be separately taxed on diners through a disguised levy. The bench questioned whether providing an ambience for a certain kind of experience does not include the services that the restaurants are providing. They further said that they don’t understand this arrangement, calling the practice neither transparent nor fair.

This comes months after a single-judge bench barred restaurants from coercively collecting service charges, describing it as a “camouflaged” tactic that undermines public interest. Friday’s hearing carried that argument forward, with the division bench pressing for clarity: if a menu lists a bottle of water at ₹100, is the extra ₹80 meant for the decor, the staff, or the brand of the restaurant?

Lawyers representing restaurant associations defended the system, insisting that menus are simply an invitation to offer. According to them, the choice rests with the customer. 

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What Is The Current Situation?

The court, however, wasn’t convinced. It pointed to the imbalance between the customer’s expectation and the lack of disclosure about how these add-on costs are justified. The judges hinted that unless restaurants are upfront about their pricing logic, they risk slipping into unfair trade practices.

The case will now be heard again on September 22, with the bench indicating it wants to reach a final decision instead of prolonging interim relief, as stated by Money Control. Whatever the outcome, the ruling is poised to set a precedent, either protecting diners from stealth charges or reaffirming restaurants’ right to price their “experience” as they see fit.

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For now, the message from the court is clear that ambience cannot become an invisible tax, and a ₹20 bottle of water should not multiply in value the moment it crosses a restaurant’s threshold.

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