Centre will bar restaurants from levying service charge

NEW DELHI: The government will frame new rules, along with a legal framework, to prevent restaurants from levying service charge on diners, which is an “unfair trade practice”, consumer affairs secretary Rohit Kumar Singh said on Thursday.

Consumers often mix up “service charge” imposed by eateries with service tax, which is a statutory levy under the Goods and Services Tax or GST, Singh said, following a meeting of the department of consumer affairs with restaurant associations and consumer-rights organisations on the issue of service charge.

Service charges were being levied by default without “express consent of consumer” and by “suppressing that such a charge is optional and voluntary and embarrassing consumers if they resist paying such charge etc”, an official statement said.

The meeting was attended by major restaurant associations including the National Restaurant Association of India and Federation of Hotel & Restaurant Associations of India (FHRAI) as well as consumer organisations, including Mumbai Grahak Panchayat.

The issue has been in contention for years now. Restaurant owners defend the practice by saying that ample declarations are made at premises for a customer to know that they will need to pay a service charge if they eat at their business, while the government has said that customers should retain the right to decide whether they want to only after they have had a meal.

The government had published guidelines on fair-trade practices related to service charge by hotels and restaurants in 2017, but these have not been followed by restaurants. “It is only after completing the meal that customer is in a position to assess quality of service… if a hotel/restaurant considers entry of a customer to imply