The new guidelines against ‘service charge’
Reacting to numerous complaints from consumers, India’s Central Consumer Protection Authority (CCPA) on Monday barred hotels and restaurants from levying service charges automatically or by default on food bills and allowed customers to file complaints in case of violation. The CCPA has issued guidelines for preventing unfair trade practices and violation of consumer rights regarding levying service charges.
“No hotels or restaurants shall add service charge automatically or by default in the bill,” CCPA Chief Commissioner said in the guideline. Restaurants and hotels generally levy a service charge of 10 percent on the food bill. The guidelines said there should not be any service charge collection by any other name. No hotel or restaurant can force a consumer to pay a service charge. They have to clearly inform the consumer that the service charge is voluntary, optional, and at the consumer’s discretion.
“No restriction on entry or provision of services based on a collection of service charge shall be imposed on consumers,” the guideline added. Further, the service charge cannot be collected by adding it along with the food bill and levying GST on the total amount. If any consumer finds that a hotel or restaurant is levying a service charge in violation of the guidelines, she/ he can request the concerned establishment to remove it from the bill amount.
Consumers can also lodge a complaint on the National Consumer Helpline (NCH), which works as an alternate dispute redressal mechanism at the pre-litigation level, by calling 1915 or through the NCH mobile app. They can also file complaints with the Consumer Commission. The complaint can be filed electronically through the e-Daakhil portal for its speedy and effective redressal.
Moreover, the consumer can submit a complaint to the District Collector of the concerned district for investigation and subsequent proceedings by the CCPA. The complaint can also be sent to the CCPA by e-mail. “Further, service charge is being levied in addition to the total price of the food items mentioned in the menu and applicable taxes, often in the guise of some other fee or charge,” it added.
The guidelines state that a component of service is inherent in the price of food and beverages offered by a restaurant or hotel. “Pricing of the product covers both the goods and services component. There is no restriction on hotels or restaurants to set the prices at which they want to offer food or beverages to consumers.
“Thus placing an order involves consent to pay the prices of food items displayed on the menu along with applicable taxes. Charging anything other than the said amount would amount to unfair trade practices under the (Consumer Protection) Act,” the guidelines said.
Meanwhile, reacting to the new guidelines, several restaurant and bar owners in Delhi on Monday opposed the Central Consumer Protection Authority (CCPA) guidelines barring them from levying service charges automatically or by default on food bills, saying it is “completely illegal and baseless“.
Restaurant owners asserted that the service charge was not levied discreetly as it is mentioned on the menu and on the bill as well. Denouncing the guidelines, Manpreet Singh, treasurer of the National Restaurants Association of India (NRAI), said the government could not tell bar and restaurant owners how to run their businesses.
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