Service charge

NRAI says there is no illegality in restaurants charging service fees, Retail News, ET Retail

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The National Restaurant Association of India (NRAI) on Tuesday defended service charges levied by restaurants across the country, saying there was no illegality in levying such fees.

Ahead of its June 2 meeting with the government to discuss issues relating to service charges levied by restaurants, the leading hospitality industry body said the levying of service charges is a matter of individual policy to decide whether it must be charged or not.

“Information regarding the amount of service charge is mentioned/displayed by restaurants on their menu cards and also displayed at the venue, so that customers are well aware of such charge before enjoying the services,” said the NRAI in a statement.

“Once the customer is informed in advance of such a charge and then decides to place the order, it becomes an agreement between the parties and is not an unfair trade practice. GST is also paid on said charge to government,” the industry body argued.

The meeting comes following the department’s consideration of a number of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH).

Earlier, noting a number of media reports as well as consumer complaints to the National Consumer Helpline (NCH), the Department of Consumer Affairs (DoCA) of the Department of Consumer Food and of Public Distribution announced the convening of the Meeting.

The issue was raised in 2016-17 and the NRAI provided its response to the government. There is nothing new that was communicated by the Department in its letter for the June 2, 2022 meeting.

Restaurants making service charges mandatory, adding service charges to the bill under the guise of other fees or charges, denying consumers that paying service charges is optional and voluntary, and embarrassing consumers in case they would resist paying the service fee would be among the issues to be discussed at the June 2 meeting.

In a letter written by Consumer Affairs Secretary Rohit Kumar Singh to the Chairman of the NRAI, it was pointed out that restaurants and eateries collect service charges from consumers by default, even though the collection of such charges is voluntary. and consumer discretion. and not required by law.

The NRAI said the same issue was raised in 2016-17 and the industry body provided its response to the government.

“There is nothing new that was communicated by the Department in its letter for the June 2 meeting,” added the NRAI, which represents more than 5 lakh restaurants, an industry valued at Rs 4,23,865 crore.