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Payment of ‘service charge’ at restaurants not mandatory, clarifies govt

In a crackdown against the practice of charging service charge in lieu of tips, by the restaurants and hotels, the government has said that it is up to the consumer if he or she wants to pay tips for the kind of service provided.
Service charge at restaurants is not mandatory,...
India TV News Desk New Delhi 02 Jan 2017, 17:21:13 PM IST

In a crackdown against the practice of charging 'service charge' in lieu of tips, by the restaurants and hotels, the government has said that it is up to the consumer if he or she wants to pay tips for the kind of service provided. 

The Department of Consumer Affairs has said that the consumer has the discretion to pay ‘service charge’ as tips, which is often billed by eateries and hotels irrespective of quality of service.  

“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,” a statement by the Department of Consumer Affairs said.  

It said that “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 department of Consumer Affairs, which falls under the Union Ministry of Consumer Affairs, Food and Public Distribution, had sought a clarification from the Hotel Association of India, which 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.  

It has asked the state governments to implement the Consumer Protection Act, 1986, which is often flouted by the hotels and restaurants.

“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,” the statement said. 

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