Service charge

The restaurant industry on the issue of service charges: the government must pass a law, not changes to the guidelines

Reacting to the guidelines recently issued by the Center on Service Fee Collection, the National Restaurant Association of India (NRAI) said on Wednesday that the government cannot bring about any change just by issuing guidelines and that a new law or an amendment to existing laws will be required for enforcement.

“Government cannot bring about change in levying service charges by setting guidelines. The guidelines, by the very nature of things, are only indicative and in the event that such a change is necessary, there must be either a new law or an amendment to existing laws,” he said. highlighted in a press release.

It happened when the experts said Activity area that industry bodies could mount a legal challenge against the guidelines.

The industry body said the latest guidelines from the Central Consumer Protection Authority have once again created unnecessary confusion among consumers and disrupted the smooth operation of restaurants. He added that through repeated directives, “there is an attempt to launch a campaign against this practice by the restaurant industry without any legal basis”.

“The service charge is part of the owner’s discretion/decision regarding the total price to be paid by a customer in connection with the sale or service of a product. It is one of the components of the total price of the product. Neither the government nor any authority can interfere with the business owner’s decision in this regard. It is a universally accepted business practice,” he added.

The industry body said consumers are informed about pricing and its components before placing an order for the product and once the customer places an order after being informed of the terms and conditions, a binding contract comes into force. “No authority can interfere with the binding nature of a valid contract until it is shown and proven to be inadmissible or contrary to any unfair trade practice,” he added.

Previous court decisions

The industry body also pointed out that the court rulings upheld the levying of service fees by the Supreme Court, High Courts and the National Consumer Dispute Redress Commission, the former Monopolies and Practices Commission. Restrictive Trade and Income Tax Authorities (ITAT).

She added that the perception of the service charge also has a socio-economic aspect since there is a system of ad hoc distribution of the service charge right up to the back of the house staff whose contribution is thus recognized and recognized under the form of a portion of the service charge collected from the customer.

“So it’s up to the owner how to run their business and what policy should be in place regarding product pricing. Levying service charge is beneficial to workers as a class who are employed in establishments. Anything to the contrary would be detrimental to the interests of workers – and against the pro-worker stance of the government,” the NRAI added.

Published on

July 06, 2022