Zee Business Impact: How hotels, restaurants barred from levying service charge on food bills

In a big relief for consumers, no hotels or restaurants can add service charges automatically or by default in the food bill. The Central Consumer Protection Authority (CCPA) on Monday barred hotels and restaurants from levying service charge automatically or by default in food bills and allowed customers to file complaints in case of violation. 

The move comes after Zee Business raised the matter on receiving complaints from consumers. After repeatedly taking up the matter, the government sources had hinted that they hotels and restaurants will be barred from this practice of adding service charges automatically or by default in the food bill. It was reported by Zee Business on June 14. Furthermore, the CCPA came up with notification on the same amid rising consumer complaints.  

Speaking on the development, Zee Business Managing Editor Anil Singhvi said that it is discretion of the consumers that whether they want to pay service charge or not. Hotels and restaurants cannot add the charge by default, he said.  

"This gets even worse when the service is bad and you are forced to pay that additional charge. We will continue to raise this matter on receiving complaints from consumers. One just has to send details of the hotels and bills," said Anil Singhvi.  

The CCPA, in its guidelines, said a tip or gratuity is towards hospitality received beyond basic minimum service contracted between the consumer and the hotel management, and constitutes a separate transaction between the consumer and staff of the hotel/restaurant at the consumer's discretion. 
 
Only after completing the meal, a consumer is in a position to assess the quality as well as service and decide whether or not to pay a tip and if so, how much. 
 
The decision to pay a tip by a consumer does not arise merely by entering the restaurant or placing an order. 
 
"Therefore, service charge cannot be added in the bill involuntarily, without allowing consumers the choice or discretion to decide whether they want to pay such charge or not," the guidelines said. 

Earlier, the CCPA has issued guidelines for preventing unfair trade practices and violation of consumer rights with regard to levying of service charge.  

"No hotels or restaurants shall add service charge automatically or by default in the bill," CCPA Chief Commissioner said in the guideline.  

Restaurants and hotels generally levy a service charge of 10 per cent on the food bill.  

The guidelines said there should not be any collection of service charge by any other name.  

No hotel or restaurant can force a consumer to pay service charge. They have to clearly inform the consumer that service charge is voluntary, optional and at consumer's discretion. 

"No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers," the guideline added. 

How consumers can raise complaints?  

If any consumer finds that a hotel or restaurant is levying service charge in violation of the guidelines, s/he can request the concerned establishment to remove it from the bill amount.  

The consumers can also lodge a complaint on the National Consumer Helpline (NCH), which works as an alternate dispute redressal mechanism at the pre-litigation level, by calling 1915 or through the NCH mobile app.  

They can also file complaints with the Consumer Commission. The complaint can be filed electronically through the e-Daakhil portal for its speedy and effective redressal.  

Moreover, the consumer can submit a complaint to the District Collector of the concerned district for investigation and subsequent proceedings by the CCPA. The complaint can also be sent to the CCPA by e-mail. 

With inputs from PTI