Hotel-Restaurant Service Charge: DoCA to soon come up with a robust framework to check service charges levied by restaurants and hotels

Hotel-Restaurant Service Charge: The Ministry of Consumer Affairs, Food & Public Distribution on Thursday said the DoCA will soon come up with a robust framework to ensure strict compliance by the stakeholders with regard to service charges levied by restaurants and hotels. The Department of Consumer Affairs said this adversely affects millions of consumers on a daily basis,  as per the official release said.

The Department held a meeting today, chaired by Rohit Kumar Singh, Secretary, DoCA, with restaurant associations and consumer organizations on the levy of service charges in hotels and restaurants. It was attended by major restaurant associations including the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) and consumer organizations including Mumbai Grahak Panchayat, Pushpa Girimaji, etc.

"During the meeting, major issues raised by the consumers on National Consumer Helpline of DoCA relating to service charge such as compulsory levy of service charge, adding the charge by default without express consent of consumer, suppressing that such charge is optional and voluntary and embarrassing consumers if they resist paying such charge etc. were discussed. Further, guidelines on fair trade practices related to charging of service charge by hotels/restaurants dated 21.04.2017 published by DoCA were also referred to," the release said.

The restaurant associations observed that when a service charge is mentioned on the menu, it involves an implied consent of the consumer to pay the charge. Service charge is used by restaurants/hotels to pay the staff and workers and is not charged for the experience or food served to consumer by the restaurant/hotel.

According to the release, "Consumer Organizations observed that levying service charge is patently arbitrary and constitutes an unfair as well as restrictive trade practice under the Consumer Protection Act. Questioning the legitimacy of such charge, it was highlighted that since there is no bar on restaurants/hotels on fixing their food prices, including an additional charge in the name of service charge is detrimental to the rights of consumers."