A day after the Centre on Monday issued a warning to restaurants against charging forceful service charge from consumers, industry body National Restaurant Association of India (NRAI) on Tuesday said that levying service charge is a matter of “individual policy” of the restaurants and dismissed claims that such a move is illegal.
The government on Monday reiterated that payment of ‘service charge’ at restaurants is voluntary and at the discretion of consumers. This came in the wake of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH) saying that the restaurants and eateries are collecting service charge from consumers by default.
Responding to this, NRAI said, “The levy of service charge by a restaurant is a matter of individual policy to decide if it is to be charged or not. There is no illegality in levying such a charge.” The industry body represents the interests of over 5,00,000 restaurants in the country.
It further added that the information regarding the amount of service charge is displayed by restaurants on menu cards or on the premises, so that customers know about the charge before they availing the services of the eatery.
Once the customer is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice. GST is also paid on the said charge to the Government, NRAI explained.
Meanwhile, the Department of Consumer Affairs (DoCA) – which comes under the Ministry of Consumer Affairs, Food and Public Distribution — has scheduled a meeting on 2nd June, 2022 with the NRAI to discuss the issues pertaining to issue.
In a letter written by Rohit Kumar Singh, Secretary, Department of Consumer Affairs to President, National Restaurant Association of India, it has been pointed out 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.”
Guidelines on service charge
The Department of Consumer Affairs has already published guidelines dated April 21, 2017 on charging of service charge by hotels/restaurants. The guidelines note that entry of a customer in a restaurant can’t be construed as a consent to pay service charge.
Any restriction on entry on the consumer by way of forcing her/him to pay service charge as a condition percent to placing an order amount to ’restrictive trade practice’ under the Consumer Protection Act.
The guidelines clearly mention that placing an order by a customer amount to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes. Charging for anything other than the afore-mentioned. without express consent of the customer. would amount to unfair trade practice as defined under the Act.
