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HomeBusinessAs Service Charge Is Being Opposed, Will Restaurants Go For Price Hikes?

As Service Charge Is Being Opposed, Will Restaurants Go For Price Hikes?


As the consumer affairs ministry has already called levying the service charge illegal, restaurants are saying it’s very much legal until the final rules come in. Commerce and Industry Minister Piyush Goyal has also said restaurants cannot force a customer to pay the service charge and eateries are free to increase food prices as there is no price control in the country.

“You (restaurants) cannot add service charge in a bill… If you feel that some more benefits are to be given to employees, it cannot be forced on customers. You can raise prices to give hikes,” Goyal on Friday said adding that customers at their discretion can give “tips” separately.

Last week, during a meeting with restaurant and hotel bodies, consumer affairs secretary Rohit Kumar Singh said that even as restaurant associations claim the practice of levying service charge is legal, the consumer affairs department thinks that it adversely affects the rights of the consumers and it is an “unfair trade practice”. It asked the NRAI to immediately stop the practice.

The ministry had called a meeting on June 2 with the National Restaurant Association of India (NRAI) following complaints from consumers regarding the service charge. Issues pertaining to service charges levied by restaurants were discussed in the meeting. Restaurants usually charge a 10 per cent service charge over the total bill.

The ministry also said it will soon come up with a robust framework with regard to the service charge levied by restaurants and hotels. However, the NRAI has said, “Media reports regarding the decision allegedly taken at the Department of Consumer Affairs meet today (June 2) with respect to the legality of service charge are untrue. Department heard views of all stakeholders and will review all inputs before deciding on the matter. Until final disposal, service charge is still very much legal.”

“During the meeting, major issues raised by the consumers on National Consumer Helpline of DoCA relating to service charge such as compulsory levy of service charge, adding the charge by default without express consent of consumer, suppressing that such charge is optional and voluntary and embarrassing consumers if they resist paying such charge etc. were discussed. Further, guidelines on fair trade practices related to charging of service charge by hotels/restaurants dated 21.04.2017 published by DoCA were also referred to,” according to an official statement by the consumer affairs department.

The meeting was attended by major restaurant associations including National Restaurant Association of India (NRAI) and Federation of Hotel & Restaurant Associations of India (FHRAI) and consumer organizations including Mumbai Grahak Panchayat, Pushpa Girimaji etc.

Last month, in a letter to the NRAI, Department of Consumer Affairs Secretary Rohit Kumar Singh had said the restaurants and eateries are collecting the service charge from consumers by default, even though the collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law.

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