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Restaurants cant fleece you any more, govt makes service charge voluntary

India TV Business Desk New Delhi 21 Apr 2017, 18:43:27 IST
India TV Business Desk

The government has decided to issue an advisory to states asking them to crack down against unfair imposition of service charge on food and drink bills.

Food and Consumer Affairs Minister Ram Vilas Paswan today said that no such thing as the service charge exists and that it was being wrongly charged.

“Hotels/Restaurants should not decide how much Service Charge is to be paid by the customer & it should be left to the discretion of customer,” Paswan tweeted.

Paswan further said that guidelines are being sent to states for necessary action at their ends.

“As per guidelines Service Charge is totally voluntary and not mandatory now. Government has approved guidelines on Service Charge,” his tweet reads. 

The advisory, once approved by the Prime Minister's Office (PMO), will be issued to all states and union territories. 

The advisory will also be useful for Voluntary Consumer Organisations (VCOs) fighting for consumer right.

Talking about doing away with service charge in restaurants, Dilip Datwani, president, Hotel and Restaurant Association of Western India (HRAWI) says, "It is sad to see constant demands being made from the hospitality industry on one issue or the other. One day it is reducing food portions and on another day it is about terminating a legitimate charge. Service charge is a global practice and one that has been in force in India for more than half a century. The charge is neither hidden nor disguised. It is categorically and boldly mentioned in the menu. A customer patronises a food outlet with the full knowledge that he/she will be levied a service charge. It is not just hospitality, but many businesses levy such charges. We cannot understand why we are being singled out.”

The levying of service charge without seeking customer consent is considered as unfair trade practice under the Consumer Protection Act. As per the law, consumers should be informed about service charge in the menu card itself. 

Earlier too on several occasions, Paswan had spoken against unfair imposition of service charge on food bill and had even sought explanation from hotels and restaurants' bodies.