Restaurants warned about levying service charges – – IPS BUSINESS SCHOOL

Restaurants warned about levying service charges

The Department of Consumer Affairs has taken a strict note of restaurants levying service charges and cautioned them against the practice. In addition to this, eateries have also been warned that any attempts to make customers pay for these charges by default will be considered a violation of the law, and businesses of this nature could be fined or closed if the issue continues.

The ministry has called a meeting with the association on 2nd June to discuss similar agendas like complaints raised by consumers; restaurants making charges and bans compulsory; restaurants charging for what are supposedly optional services in an underhand way; waiters shaming patrons who choose not to pay.

The meeting comes as a result of a number of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH).

Consumer affairs secretary Rohit Kumar Singh has written to the NRAI President pointing out the high service charges that are fixed by restaurants.

In April 2017, the ministry issued guidelines on charging service charges by hotels/restaurants.

As per the guidelines, no restaurants and eateries can charge service tax by default in a bill. The area for service charge has to be kept blank (without any amount) so that the consumers can pay (or not) as per their own will.

The guidelines note that the entry of a customer in a restaurant cannot be itself construed as consent to pay a service charge. Any restriction on entry of the consumer by forcing her/him to pay the service charge as a condition for placing an order amounts to "restrictive trade practice" under the Consumer Protection Act.

The guidelines also mention that placing an order by a customer amounts to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes. Charging for anything other than the aforementioned, without consent of the customer would amount to unfair trade practice as defined under the Act.

In case of unfair/restrictive trade practices, consumers can approach a Consumer Disputes Redressal Commission / Forum of appropriate jurisdiction.



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