Service charge

Payment of service charges in restaurants is voluntary, at the discretion of consumers and not mandatory by law: Government reiterates

New Delhi: The government reiterated on Monday that payment of “service charges” in restaurants is voluntary and at the discretion of consumers.

This follows media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH) claiming that restaurants and restaurants collect service charges from consumers by default.
The Department of Consumer Affairs (DoCA) – under the Ministry of Consumer Affairs, Food and Utilities – has scheduled a meeting on June 2, 2022 with the National Restaurant Association of India to discuss issues relating to restaurant fees. service levied by Restaurants.
In a letter written by Rohit Kumar Singh, Secretary of the Department of Consumer Affairs to the President of the National Restaurant Association of India, it was pointed out that restaurants and restaurants “by default collect service charges from consumers, even though the collection of such charge is voluntary and at the discretion of consumers and not mandatory by law,” according to a GDP statement.

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It was pointed out in the letter that consumers are forced to pay service charges, often set at arbitrarily high rates by restaurants. Consumers are also being misled about the legality of these charges and harassed by restaurants when they ask to remove these charges from the bill amount, the statement added.

“Given that this issue affects consumers as a whole on a daily basis and has significant consumer rights ramifications, the department has found it necessary to examine it more closely and in detail,” the letter adds.

Among the issues to be discussed at the meeting are — restaurants making service charges mandatory; add service charges to the bill under cover of other fees or charges; remove to consumers that payment of service fees is optional and voluntary; and embarrass consumers if they refuse to pay the service charge.

The Department of Consumer Affairs has already issued guidelines dated 21.04.2017 on the charging of service charges by hotels/restaurants. The guidelines clarify that a customer’s entrance into a restaurant cannot by itself be construed as consent to pay a service charge. Any entry restriction imposed on the consumer by requiring them to pay a service charge as a conditional percentage to place an order amounts to a “restrictive business practice” under consumer protection law, the statement said. .

The instructions clearly mention that the placing of an order by a customer is equivalent to his commitment to pay the prices displayed on the menu card as well as the applicable taxes. Billing for anything other than the above. without the express consent of the customer. would amount to an unfair trade practice within the meaning of the law, he said.

In accordance with the guidelines, a customer has the right to exercise their rights as a consumer to be heard and redressed under the provisions of the law in the event of unfair/restrictive commercial practices. Consumers may apply to a consumer dispute resolution board/forum in the appropriate jurisdiction.