Customers cannot be forced into paying ‘service charge’, Centre warns restaurants

Restaurants cannot force consumers to pay ‘service charge’ as it is a voluntary payment depending on the discretion of consumers, the Ministry of Consumer Affairs, Food & Public Distribution said on Monday.

In a letter to the President of the National Restaurant Association of India, the Department of Consumer Affairs (DoCA) has cautioned the restaurants and eateries against the forced collection of service charges from the consumers.

Rohit Kumar Singh, Secretary, the Department of Consumer Affairs, has pointed out in the letter that the consumers are forced to pay service charge, 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.

"Since this issue impacts consumers at large on a daily basis and has significant ramifications on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail," Singh said in the letter.

To discuss the issues pertaining to service charge levied by restaurants, the Department of Consumer Affairs has scheduled a meeting on 2nd June, 2022 with the National Restaurant Association of India.

"The meeting follows as a result of DoCA taking notice of a number of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH)," the Ministry of Consumer Affairs, Food & Public Distribution said in a statement.

In April 2017, the Department of Consumer Affairs published detailed guidelines related to charging of service charge by hotels/restaurants. The guidelines note that entry of a customer in a restaurant cannot itself be construed as consent to pay a service charge. Any restriction on entry on the consumer by way of forcing her/him to pay the service charge as a condition per cent to placing an order amount to `restrictive trade practice` under the Consumer Protection Act.

The guidelines clearly mention that placing of an order by a customer amount to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes. Charging for anything other than the aforementioned without the express consent of the customer would amount to unfair trade practices as defined under the Act.

"As per the guidelines, a customer is entitled to exercise his/her rights as a consumer to be heard and redressed under provisions of the Act in case of unfair/restrictive trade practices. Consumers can approach a Consumer Disputes Redressal Commission / Forum of appropriate jurisdiction," the ministry said.

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