After the consumer affairs ministry said it will soon come up with a robust framework with regard to the service charge levied by restaurants and hotels, the National Restaurant Association of India (NRAI) has said the ministry heard views of all stakeholders and will review all inputs before deciding on the matter. It added that until the final disposal, the service charge is still very much legal.
A meeting was conducted between the NRAI and the consumer affairs department on Thursday following complaints from consumers on the service charge levied by restaurants. In the meeting, as per reports, the department called the service charge levied by restaurants illegal and asked the NRAI to immediately stop the practice. The ministry also said levying the service charge is adversely impacting consumers.
Restaurants usually charge a 10 per cent service charge over the total bill.
The meeting was chaired by Rohit Kumar Singh, secretary of consumer affairs department.
“Media reports regarding decision allegedly taken at Department of Consumer Affairs meet today with respect to the legality of service charge are untrue. Department heard views of all stakeholders and will review all inputs before deciding on the matter. Until final disposal, service charge is still very much legal,” the NRAI said in a tweet.
NRAI issues clarification on #ServiceCharge Issue.#DontGrudgeIt #ServiceChargeIsLegal #Restaurants #Restaurantindustry pic.twitter.com/hYy3Ar2nO4
— NRAI (@NRAI_India) June 2, 2022
The meeting was attended by major restaurant associations including National Restaurant Association of India (NRAI) and Federation of Hotel & Restaurant Associations of India (FHRAI) and consumer organizations including Mumbai Grahak Panchayat, Pushpa Girimaji etc.
“During the meeting, major issues raised by the consumers on National Consumer Helpline of DoCA relating to service charge such as compulsory levy of service charge, adding the charge by default without express consent of consumer, suppressing that such charge is optional and voluntary and embarrassing consumers if they resist paying such charge etc. were discussed. Further, guidelines on fair trade practices related to charging of service charge by hotels/restaurants dated 21.04.2017 published by DoCA were also referred to, according to an official statement by the consumer affairs department.
The restaurant associations observed that when service charge is mentioned on the menu, it involves an implied consent of the consumer to pay the charge. Service charge is used by restaurants/hotels to pay the staff and workers and is not charged for the experience or food served to consumer by the restaurant/hotel, it said.
Consumer organisations observed that levying service charge is patently arbitrary and constitutes an unfair as well as restrictive trade practice under the Consumer Protection Act. Questioning the legitimacy of such charge, it was highlighted that since there is no bar on restaurants/hotels on fixing their food prices, including an additional charge in the name of service charge is detrimental to the rights of consumers.
In a letter to the NRAI recently, Department of Consumer Affairs Secretary Rohit Kumar Singh pointed out that the restaurants and eateries are collecting the service charge from consumers by default, even though the collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law.
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