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'Service charges' in restaurants optional, says government

'Service charges' in restaurants optional, says government


In a big relief to the consumers, the government has said restaurants billing `service charges’ in addition to taxes was optional. The move would make eating out cheaper. In a statement, the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Public Distribution, has said it was the discretion of the consumer whether or not to pay `service charge’ and described it as an unfair practice.

The Ministry said that a number of complaints from consumers have been received that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him.

The Consumer Protection Act, 1986 provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices.

In this context, the Department of Consumer Affairs, called for clarification from the Hotel Association of India, which said that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily.

The Department of Consumer Affairs has asked the State Governments to sensitize the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986 and also to advise the hotels/restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the 'service charges’ are discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off."

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