Service charge not mandatory in restaurants: govt
02 Jan 2017
The central government has clarified that restaurants cannot slap service charges on customers arbitrarily and that customers have a right to refuse to pay for service if unsatisfied.
The Department of Consumer Affairs has instructed restaurant owners to inform the customers in adequate manner that the service charge is not compulsory to be paid.
The restaurants' and hotels' body also approved the Consumer Affairs Department's decision, saying that the service charge would be kept voluntary.
All eateries will be asked to put out display boards informing that service charges are entirely discretionary and customers may not pay it if they did not like the service.
The decision taken by Consumer Affairs Department after consultation with Hotel Association of India is likely to relieve a section of restaurant eaters, who were burdened with 5 per cent to 20 per cent in service charges that inflated already high food bills.
Restaurants billing 'service charges' in addition to taxes is optional as consumers have the discretion to pay 'service charge' or not, the Department of Consumer Affairs stated in a release today.
The consumer affairs ministry's move comes in the wake of a number of complaints received from consumers that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him.
''The Consumer Protection Act, 1986 provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices. In this context,'' the department of Consumer Affairs stated.
In its reply to the central government on the practice of imposing service charges on Customers, the Hotel Association of India, has clarified that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily.
The Department of Consumer Affairs has asked the state governments to sensitise the companies, hotels and restaurants in the respective states regarding the provisions of the Consumer Protection Act, 1986 and also to advise hotels/restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the 'service charges" are discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off.
