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Delhi plans to scrap MCD restaurant licence to boost ease of business

Delhi Lieutenant Governor (L-G) VK Saxena has said that the Municipal Corporation of Delhi (MCD) licence requirement for restaurants is being scrapped to promote ease of doing business. Speaking at an event by The Indian Express, Saxena said, 'Today, there is a need for ease of doing business… People should not have to come to the government, the government should go to the people.' He added that the licensing system in Delhi has ended and that three-star and four-star hotels are now allowed to operate 24/7. Until now, restaurants were required to obtain a Health Trade Licence from the MCD, which had to be renewed every year. Just last month, the L-G had also issued a notification removing the requirement of Delhi Police clearance for businesses like hotels and restaurants. Encroachments and freebies hurting Delhi: Kant India's G20 Sherpa and former NITI Aayog CEO Amitabh Kant, who shared the stage with Saxena, flagged encroachments and freebies as major concerns in the capital. He said that politicians in Delhi have often promoted encroachments, especially ahead of elections when such settlements are regularised. Once established, these encroachments become extremely difficult to remove, he said, as quoted by the news report. Delhi govt scraps police approval for hotels, pools The Delhi government has officially removed the requirement for police clearance for seven types of commercial activities. These include hotels, swimming pools, restaurants, discotheques, video game parlours, amusement parks, and auditoriums, news agency PTI had reported. This move stems from an order issued on June 19 by the L-G. Using his powers under Section 28(2) and Section 4 of the Delhi Police Act, 1978, Saxena annulled several long-standing police regulations. These rules had been in place for decades — dating back to 1980 in the case of swimming pools — and included recent guidelines introduced in 2023 for establishments like hotels and restaurants. Restaurants can't enforce service charge: Delhi HC In March this year, the Delhi High Court ruled that restaurants and hotels cannot compel customers to pay a service charge or tip, stating that doing so infringes on consumer rights. 'Service charge or tip, as it is colloquially referred to, is a voluntary payment by the customer. It cannot be compulsory or mandatory. The practice undertaken by the restaurant establishments of collecting service charge, that too on a mandatory basis, in a coercive manner, would be contrary to consumer interest and is violative of consumer rights,' said Justice Pratibha M Singh. The Delhi High Court backed the Central Consumer Protection Authority's (CCPA) 2022 guidelines, which bars hotels and restaurants from adding service charges to food bills by default or automatically. The court said that the enforcement of such charges often happens in a coercive manner, leading to confusion among customers. Many are unable to distinguish between government-imposed taxes, such as service tax or GST, and the service charge or tips added by restaurants. 'In fact, for the consumers, the collection of service charge is proving to be a double whammy — they are forced to pay service tax and GST on the service charge as well. This position cannot be ignored by the court,' the court observed in its order.