Service charge

The Center says service charges levied by restaurants are illegal

Consumer Affairs Secretary Rohit Kumar Singh, in a letter to the NRAI Chairman, had pointed out that restaurants and eateries collect service charges from consumers by default, even though such collection is voluntary.

Service charges levied by restaurants are illegal, the Center said on Thursday and called on the National Restaurant Association of India (NRAI) to end the practice immediately. The decision was taken during a meeting between the Department of Consumer Affairs and the NRAI over discussions regarding complaints from consumers being forced to pay service charges. The department has become aware of a number of media reports and complaints registered by consumers on the National Consumer Helpline, the PTI news agency reported.

Consumer Affairs Secretary Rohit Kumar Singh, in a letter to the NRAI Chairman, had pointed out that restaurants and eateries collect service charges from consumers by default, even though such collection is voluntary.

The secretary had pointed out that consumers were being forced to pay service charges often set at arbitrarily high rates by restaurants. The secretary added that consumers were being “falsely misled” about the legal status of such charges and harassed by restaurants when they demanded that they be removed from the bill.

“Given that this issue has a daily impact on consumers as a whole and has significant consumer rights ramifications, the department has found it necessary to examine it more closely and in detail,” PTI quoted the letter.

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

The guidelines stated that a customer’s entrance into a restaurant cannot by itself be construed as consent to pay a service charge.


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