Home / Industry / Retail /  Customers can’t object to service charge after meals, say restaurants
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NEW DELHI : A war of words has broken out between the government and National Restaurant Association of India over the legality of the service charges levied by hotels and restaurants, with the association refusing to accept the department of consumer affairs’ stand that a voluntary fee cannot be thrust upon consumers without their consent.

Despite a warning by the department asking restaurants for strict compliance with the service charge rules, following several complaints by customers on the national consumer helpline, NRAI said a person cannot ask for the removal of service charges after consuming the food. It said that once a customer places an order, the charge is part of an agreement between the two parties, and the person has to pay it. It is neither an unfair trade practice nor illegal and, if removed, it will affect thousands of workers, NRAI added.

“Levying service charge is beneficial for the workmen as a class, who are employed in the establishments. Any move to the contrary would be detrimental to their interests, and against the labour-friendly stance of the government. It also brings in revenue for the government, since tax is paid on the same," NRAI said.

However, the government is of the view that the additional cost affects the consumers on a daily basis, and should not be made mandatory.

The matter was discussed at length during a meeting held on Thursday between restaurant associations, consumer organisations and the department of consumer affairs, but with no positive outcome with each side standing firm on its position.

The NRAI also said it was a matter of individual policy and customers are aware of the charge as the information is displayed by restaurants on menu cards as well as on the premises. It is up to the customer to accept the offer of the restaurant or not, before placing their order, NRAI added.

This matter, it said, had also come up in 2016-17, and the body had provided response to the government on the issue. Last month, the consumer affairs, food, and public distribution ministry had, in a statement, said consumers were being misled about the legality of the service charge and were being harassed for requesting the removal of the charge from bills.

“We have firmly reiterated all facts with proof that the levy of service charge is neither illegal, nor unfair trade practice as alleged, and this debate in public domain is creating unnecessary confusion and disruption in smooth operations of restaurants. The charge is transparent, worker friendly and is also recognised by many judicial orders which were shared with the department." Ajit Shah the co-founder of White Panda Hospitality, said the money always goes for staff’ welfare and is distributed as a percentage to both front- and back-of house staff. “The service charge was introduced in the system to replace the unstable system of tips," he said. As far as the law is concerned, the charge is discretionary and the contract kicks in after the food has been consumed.

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