The central government on Monday (July 4) issued new guidelines and barred restaurants and hotels from levying a service charge without the express consent of a diner. According to a statement by the ministry of consumer affairs, customers can file a complaint if the ban is violated.
"The guidelines issued by CCPA stipulate that restaurants or hotels shall not add service charge automatically or by default in the food bill. Any other name shall do no collection of service charge. No restaurant or hotel shall force a consumer to pay the service charge and inform that service charge is voluntary, optional and at consumer's discretion," the government statement said.
Unfair Trade Practice
The Central Consumer Protection Authority (CCPA), a regulatory body set up in 2019, defied the practice of levying service charges by default as an unfair trade practice.
The levy has been in contention for many years now. In June, the central government held a meeting with restaurant lobby and consumer rights groups, after which the ministry said it would add a new framework to bar services charges altogether, Hindustan Times reported.
In May, the Consumer Affairs Department had written to the National Restaurant Association of India about the abuse of customer rights. The department had noted that the service charge fixed by the restaurants is often arbitrarily high. The letter also mentioned misleading customers about the legality of the costs.
Service Component Included In Food Cost
The guidelines stated that a service component is already included in the cost of food and beverages offered by a hotel or restaurant, and there is no restriction on them to set the prices at which they want to provide food or drinks to consumers, Scroll reported.
The authority said that when customers order a dish on the menu along with the applicable taxes, they consent to pay for it. "Charging anything other than the said amount would amount to unfair trade practices under the [Consumer Protection] Act," the guidelines stated.
It added that the tip comprises a separate voluntary transaction between the consumer and staff of the hotel. "Only after eating the meal a diner is in a position to assess the quality as well as service and decide whether or not to pay a tip and, if so, how much," the authority added.
People cannot be denied entry based on whether or not they consent to service charges, and the money cannot be "collected by adding it along with the food bill and levying GST on the total amount".
The statement said that consumers can first reach out to the business. If the matter remains unresolved, they can raise the dispute to the National Consumer Helpline (NCH) by calling 1915 or through its mobile app or complaint to the district administration. "The consumer may also file a complaint against unfair trade practice with the Consumer Commission. It can also be filed electronically through e-daakhil portal…" it added.
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