Customers can refuse to pay service charge in hotels
Onus now on states to enforce Centre’s rules
Next time you go to a hotel or a restaurant, you can decide to pay the service charge in the bill or not. If any establishment says the payment is mandatory, one may approach a Consumer Disputes Redressal Commission or Forum.
The Centre on Friday issued a series of guidelines that make payment of service charge in hotels and restaurants absolutely voluntary. The establishments have to clearly mention this in invoice or bill. The guidelines will be sent to states for necessary action, food and consumer affairs minister Ram Vilas Paswan said.
Hoteliers and restaurant owners, however, say unless the guidelines are made into a law, it cannot be enforced.
“We do mention the service charge in our bills and invoices and if any customer does not want to pay it, he or she could look for other hotels. We don’t levy the service charge for us -- around 30 per cent of this goes to the waiters and ancillary staff,” Joy Singh, owner of Raasta Restaurants, told this newspaper.
The government guidelines say if any hotel or restaurant considers mere entry of a customer as consent to pay service charge, it is not correct. “Any restriction of entry based on this (service charge) amounts to a trade practice which imposes an unjustified cost on the customer, by way of forcing him or her to pay this charge as a condition precedent to placing order of food and beverages. As such, it falls under the restrictive trade practice,” the guidelines say.
The norms, if implemented, will provide relief to customers who have to pay service charge up to 20 per cent on food bills, in lieu of tips.
Paswan later told some reporters that he wasn’t giving legal backing to the change but the guideline would enable states to crack down. He said these had approval of the Prime Minister’s Office (PMO).
He said once you order a food item, you agree to pay price of product as mentioned in the menu, along with taxes; paying of any other charge is not right. The guidelines say the column on service charge in a bill will be left blank for customers to fill before final payment.
The current consumer protection law does not empower the ministry to go for hefty fines and stringent action against violations. However, a new Bill under which an authority will be set up will have power to take action, an official explained.
Last week, Paswan had said the ministry had prepared an advisory on the service charge issue and this had been sent to the PMO for approval.
A number of complaints from consumers have been received that hotels and restaurants were putting 'service charge' in the range of five to 20 per cent, in lieu of tips, the ministry had said earlier.
"Service charge is a global practice and one that has been in force in India for more than half a century. The charge is neither hidden nor disguised. It is categorically and boldly mentioned in the menu," said Dilip Datwani, president, Hotel and Restaurant Association of Western India. "A customer patronises a food outlet with the full knowledge that he or she will be levied a service charge. It is not just hospitality; many businesses levy such charges. We cannot understand why we are being singled out."