Restaurants can’t insist on service charge: Govt

The government has taken up the case of levying service charge by restaurants with the trade body. It has been pointed out that such a practice is against the guidelines issued by the government.

In a letter written to the National Restaurant Association of India, the Department of Consumer Affairs said that the restaurants and eateries are collecting service charge from consumers by default, even though collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law.

As per the guidelines published by the department on April 21, 2017, forcing a customer to pay service charge by a restaurant was a ‘restrictive trade practice’ under the Consumer Protection Act. Consumers can approach a Consumer Disputes Redressal Commission or a forum of appropriate jurisdiction.

However, the department has noticed that restaurants were following the practice, going by media reports as well as grievances registered by consumers on the National Consumer Helpline.

The consumers are forced to pay service charge, often fixed at arbitrarily high rates by restaurants. Consumers are also being falsely misled on the legality of such charges and harassed by restaurants on making a request to remove such charges from the bill amount. They also add service charge in the bill in the guise of some other fee or charge.

“Since this issue impacts consumers at large on a daily basis and has significant ramification on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail”, the letter said.

The department will meet the representatives of the National Restaurant Association of India to discuss the issue on June 2.