Govt Declares Service Charges As Illegal, Stops Restaurants From Adding Service Charges In The Bills!

Service charges that are imposed on us customers by restaurants are illegal, as per the Centre. The NRAI has also been asked to end these tactics immediately. 

In fact, service charges at restaurants have always been voluntary, but restaurants tend to include them in the bills, and customers are often unaware of this. 

To think of how much money we have “had to” pay in the name of service charge!

Centre Stops Restaurants From Compulsorily Imposing Service Charge

This loot has finally stopped after the Consumer affairs secretary Rohit Kumar Singh stated that restaurants and eateries were collecting service charges from consumers by default, despite the charge being voluntary.

Consumers are being forced to pay service charges that are typically set at arbitrarily high rates by eateries, according to the secretary. Consumers were ‘falsely misled’ about the legal validity of such charges, according to the secretary, and restaurants were harassing them when they asked for them to be removed from the bill.

As per the letter, “Since this issue impacts consumers at large on a daily basis and has significant ramification on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail.”

Restaurants Forcing Customers To Pay Service Charges: What Is The Rule?

Oftentimes, on going to restaurants, the bill comprises a 5% service charge, besides 2.5% GST charges. This service charge, according to the Union Ministry of Consumer Affairs, Food and Public Distribution, if levied by the restaurant body on the customer bill, is considered as an ‘unfair trade practice’.

However, even now, many hotels and restaurants levy a compulsory service charge on the food bill.

The development has come days after a Hyderabad-based advocate filed a complaint against an upscale restaurant in the city, under the Consumer Protection Act, 2019, alleging the restaurant to force customers to pay a 5% service charge on the food bill.

This is not the first time that the issue of service charges has been brought up! The government of India had to issue a press release issuing directives for service charge, which is currently being forcefully charged by restaurant owners.

In a press release published by Press Information Bureau, Govt. has made it clear that service charge is an optional charge, and the customer only needs to pay it if he or she wants to pay.

Or in other words, restaurants and hotels cannot simply force a service charge on the customer.

The press release said, “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.”

Will restaurants and eateries finally stop forcing our hand? We’ll keep you informed as we get any more updates!