Great news for customers.
Unhappy with the trip to the restaurant? Well now you can refuse to pay the service charge according to a new government circular. Service charge, which ranges from 5 to 20% cannot be mandatorily applied by restaurants, the Department of Consumer Affairs said, claiming the automatically applying of a service fee violates ‘free trade practices’. The Hotel Association of India has also confirmed that the service charge is ‘discretionary’ and can be ‘waived off’ if the customer is unsatisfied.
"A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him," Union Consumer Affairs Ministry said in an official statement.
Union Minister of Food & Public Distribution, Consumer Affairs Ram Vilas Paswan tweeted: “Restaurants are billing service charges in addition to taxes. Service charge is optional. Consumer has a discretion to pay or not.
The Ministry had sought clarification from the Hotel Association of India, which replied that "service charge is completely discretionary and should a customer be dissatisfied with the dining experience, he/she can have it waived off.
Therefore, it is deemed to be accepted voluntarily." Highlighting provisions under the Consumer Protection Act, 1986, the ministry said this law provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice.
A consumer can make a complaint to the appropriate consumer forum against such unfair trade practices.
"The Department of Consumer Affairs has asked the state governments to sensitise the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986...
"...and also to advise the hotels/restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the 'service charges' are discretionary/voluntary and a consumer dissatisfied with the services can have it waived off," the statement said.
Read the full statement below:
A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him. The Consumer Protection Act, 1986 provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices. In this context, the department of Consumer Affairs, Central Government has called for clarification from the Hotel Association of India, which have replied that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily.
The Department of Consumer Affairs has asked the State Governments to sensitize the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986 and also to advise the Hotels/Restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the 'service charges" are discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off.
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