Key Highlights: 

  • Govt says received 188 complaints against hotels over service charge issues
  • Paying service charge is at the discretion of the consumer
  • A law is in works to set up agency to look into these unfair practices

Even as restaurants continue to blatantly force consumers to pay service charge, the Government on Tuesday clarified that the charge is not mandatory. 

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CR Chaudhary, Minister of State Ministry of Consumer Affairs, Food and Public Distribution, in a written reply to Lok Sabha said, "As per these guidelines, the bill presented to the customer may clearly display that service charge is voluntary, and the service charge column of the bill may be left blank for the customer to fill up before making payment."

He further said, "A customer is entitled to exercise his/her rights as a consumer, to be heard and redressed under provisions of the Act in case of unfair/restrictive trade practices, and can approach a Consumer Disputes Redressal Commission/Forum of appropriate jurisdiction."

The minister also said that last year, the National Consumer Helpline received 188 complaints from consumers where were asked to pay service charge by restaurants and hotels.

"The complaints are taken up with the hotels and restaurants concerned," Chaudhary said. 

With the rollout of Goods and Services Tax (GST) earlier this month, the issues of consumers going to restaurants and hotels have been multiplied. 

These eating establishments are now charging 18% GST on service charge that they ask consumers to pay up mandatorily. 

Prakul Kumar, Secretary General, NRAI (National Restaurant Association of India), on July 4 told Zeebiz, "It is once again reiterated that as of now levy of service charge by restaurants is legal and does not violate provisions of the law. There are even judicial pronouncements to support that ‘service charge’ can be levied by hotels and restaurants. It is a matter of policy for a restaurant to decide if service charge is to be levied or not."

He added, "Inclusion of service charge in a restaurant bill is a common and accepted practice, and has also been recognised as such by various concerned Central / State Government departments in various communications and public announcements for inclusion of the same in calculating the total invoice value on which taxes are to be levied."

The minister said that the Consumer Protection Bill, 2015 seeks to establish a Central Consumer protection Authority, an executive agency, which will look into unfair trade practices.

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