Customers Can’t Refuse To Pay Service Charges After Eating In A Restaurant; Nothing Illegal About Service Charges, Says Restaurant Association

Union Minister Piyush Goyal said on Friday that though restaurants and hotels can raise the prices but also they cannot without the customer’s explicit consent, levy any service charges.

If a restaurant owner wants to pay a higher salary to their employees then they are free to increase rates on their food menu as there are no price controls in the country.

Minister of consumer affairs, food & public distribution said that “Restaurants can charge whatever they want, there’s no price control from the government’s side. Some of them are transparent to the extent that they also say prices are inclusive of taxes or GST will be charged separately”.

Service Charge Cannot be Charged on Bill

He added that restaurants cannot charge service charges on the bill. If a consumer likes the service, they can pay tips, that is their prerogative. However, if a restaurant thinks of increasing the prices, then they cannot be objected.

The issue of wrongful collection of service charge has become a contentious issue with the ministry of consumer affairs meeting the National Restaurant Association of India (NRAI) on Thursday, 2 June, taking note of complaints it received.

According to present rules, a customer’s entry itself in the restaurant cannot be construed as his consent to pay the service charge.

Under the Consumer Protection Act, any restriction on entry on the consumer by way of forcing her or him to pay service charge as a condition amounts to ’restrictive trade practice’.

Levying Service Charge “Unfair” & “Restrictive”

Organizations during a recently concluded stakeholder meeting argued that levying service charge is arbitrary and constitutes an unfair as well as restrictive trade practice under the Consumer Protection Act.

Ministry of Consumer Affairs, Food & Public Distribution had said in a statement “Questioning the legitimacy of such charge, it was highlighted that since there is no bar on restaurants/hotels on fixing their food prices, including an additional charge in the name of service charge is detrimental to the rights of consumers”.

The associations stated that when service charge is mentioned on the menu, it involves an implied consent of the consumer to pay the charge. Service charge is used by restaurants and hotels to pay the staff and workers and is not charged for the experience.