No need for law to penalise levy of service charge: Minister

Union Food and Consumer Affairs Minister Ramvilas Paswan on Sunday ruled out a legislation to penalise hotels and restaurants in the country for levying service charge on customers.

Paswan said enough awareness on the issue and public demand were required before the government could enact a law on the contentious issue.

"We have issued guidelines to inform consumers about their rights that the service charge is voluntary. Hotels and restaurants cannot make it mandatory. It is up to a consumer if he/she wants to pay it or not. If I say something (on legislation) now, it will be said that the government is interfering," he told the media here.

Hotels and restaurants should not assume that they can levy service charge if the government has not brought in the (necessary) legislation, he added.

If restaurants say they pay a part of the service charge to their waiters, then it should be recorded and be accounted for in the tax return, Paswan said.

"A consumers can approach a consumer court if he or she is forced to pay service charge."

He said his ministry's intention to issue latest guidelines on the unfair trade practices with regard to service charge was to "awaken consumers about their rights".

Paswan said consumers had the right to know about food quantity and charges on food items as per the Consumer Protection Act, 1986.

According to the guidelines, the bills should clearly indicate that the service charge is voluntary and the service charge column in the bill should be left bank for the customer to fill up before making payment.

Customer can also decide whether or not to pay the service charge or tip only after assessing the quality of service, and also how much.