Govt directs eateries to not force consumers to pay service charge

New Delhi: As food business activities are getting back on track after facing lockdown challenges due to Covid-19 outbreak, the Centre has directed restaurant owners to not force consumers to pay service charge as it's not mandatory.

As it came to the notice of the Department of Consumer Affairs (DoCA) that restaurants and eateries are collecting service charge from consumers by default, the department has called a meeting with the National Restaurant Association of India over the issue on June 2.

According to an official statement, the "issues pertaining to service charge levied by restaurants" will be discussed during the meeting.

The meeting comes days after Consumer Affairs Secretary Rohit Kumar Singh wrote a letter to the restaurant body and highlighted the collection of service charges by eateries. In his letter, the Secretary told them that the restaurants and eateries are collecting service charges from consumers by default, even though collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law.

"It has been pointed out in the letter that the consumers are forced to pay service charges, often fixed at arbitrarily high rates by restaurants. Consumers are also being falsely misled on the legality of such charges and harassed by restaurants on making a request to remove such charges from the bill amount," the statement said.

"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," the statement said.

During the meeting, four issues — restaurants making service charge compulsory, adding service charge in the bill in the guise of some other fee or charge, suppressing from consumers that paying service charge is optional and voluntary and embarrassing consumers in case they resist from paying service charge — will be discussed.

In April 2017, the department had issued guidelines to hotels/restaurants on service charge.

"The guidelines note that entry of a customer in a restaurant cannot be itself construed as a consent to pay service charge. Any restriction on entry on the consumer by way of forcing her/him to pay service charge as a condition per cent to placing an order amount to 'restrictive trade practice' under the Consumer Protection Act," it said.