Service charge

Service fee imbroglio should be resolved soon | Latest Delhi News

New Delhi: The Union Consumer Affairs Department is under pressure from consumers to enact a law to scrap hotel industry forcible service charges and end a vexatious problem for more than 20 years. ‘a decade.

This pernicious practice which has crept onto the Indian scene via the UK and other nations, has long agitated consumers. Serving the customer is central to the hotel business and the bill that is presented to a customer incorporates all expenses including food, overhead, profit margin and the cost of serving the consumer. Yet the industry has forced consumers to pay an additional, pre-determined, unfair and illegal levy, in the form of a “service charge” added to the bill, claiming that it replaces the tip or gratuity that consumers pay to as they please, depending on the service.

In response to increasing consumer complaints, the ministry convened a meeting of all stakeholders last month. While consumers wanted the department to end this practice, the industry continued to argue that there was nothing illegal or unfair about the levy.

In 2017, the ministry learned of consumer resentment and anger over the charge and issued detailed guidelines stating that the hospitality industry could not convert a voluntary gratuity into a mandatory levy and force consumers to pay. Since it was only a guideline and did not have the force of law, the industry ignored the ministry’s advice. The guidelines also described such a practice as an unfair commercial practice and a restrictive commercial practice and indicated that consumers could go to consumer courts for redress.

Many consumers have taken this advice and recovered from consumer courts, paid service fees and also won compensation and court costs. In Punjab Grill Restaurant Vs Shri Jai Jeet Singh, for example, the Maharashtra State Consumer Dispute Redress Commission upheld in July 2018, the compensation of 5000 and a fee of equal amount plus reimbursement of service charge awarded by the Mumbai District Commission to the consumer, an IPS agent, who was forced by the restaurant to pay a service charge. At Arkadeep Sarkar Vs Yauatcha, Kolkata District Consumer Commission II (Central) in January this year ordered the restaurant to return to the consumer, the service charge collected and also to pay 10,000 in compensation and 3000 as a fee. Similarly to G.Thabre Alam Vs Buhari Hotel, Chennai (South) District Commission in January 2019 awarded 10,000 in compensation, 5000 as a fee and ordered the restaurant to refund the service charge

So many consumers have taken a cudgel on restaurants by forcing them to pay the service charge, but that hasn’t deterred restaurants, which are actually challenging consumers and saying they don’t need to charge them. patronize if they don’t want to pay the service fee. . There is therefore an urgent need for the Ministry of Consumer Affairs to intervene quickly and protect consumers, who as a class have paid millions of rupees they do not owe, to the hotel sector. In fact, consumer justice requires that this amount be recovered from the restaurants and hotels that imposed this levy and paid to the Consumer Welfare Fund.

Above all, given that the imposition of service charges and some of the practices associated with it fall within the definition of “unfair contract” as well as “restrictive business practice” and “unfair business practice” under the Consumer Protection Act 2019, the Central Consumer Protection Authority constituted under the Act should take up such cases on its own initiative and order the cessation of such practices which are unfair and harmful to the interests of consumers. And anyone who fails to comply with the instructions of the authority on these matters is liable to imprisonment for up to six months or a fine of 20 lakhs or both. The central authority may also issue regulations to give effect to the provisions of the law.

The law also empowers the central government to make rules for carrying out the provisions of the law, including rules on how to issue invoices for services rendered or goods sold. And not issuing invoices in the prescribed manner is an unfair business practice. Thus, the Department of Consumer Affairs is now better equipped to deal with the issue and it is hoped that consumers will soon get much needed relief.