Consumer Protection

‘Service Charges’ in Restaurants billing not compulsory, says Govt

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The Department of Consumer Affairs in a notification has said that restaurants billing ‘service charges’ in addition to taxes is optional and the consumer has discretion to pay ‘service charge’ or not.

In this regard, the Department has asked the State Governments to sensitise the companies, hotels and restaurants in the states regarding 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.

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.

The move is said to be the result of complaints from consumers that hotels and restaurants are following the practice of charging ‘service charge’ in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him.

In this context, the Department of Consumer Affairs, Central Government has called for clarification from the Hotel Association of India, which have replied 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.

Union Minister of Food & Public Distribution, Consumer Affairs Ram Vilas Paswan tweeted, “Restaurants are billing service charges in addition to taxes. Service charge is optional. Consumer has a discretion to pay or not.”

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