The Consumer Affairs Ministry on Thursday termed the service charges levied by restaurants as illegal and asked the National Restaurant Association India (NRAI) to stop this practice immediately. It said consumers are being adversely affected by levying service charges, sources told CNBC-TV18.
The ministry also said that there is no legal sanctity attached to this levy which is charged from consumers and the government will come up with a legal framework regarding this, according to sources. The legal formulation will be binding on the restaurant.
Following consumer complaints, the ministry had scheduled a meeting with the National Restaurant Association of India (NRAI) on June 2 to discuss issues related to service charges levied by restaurants. Restaurants usually charge a 10 per cent service charge on the total bill.
“This meeting took place as a result of DoCA taking note of several media reports as well as complaints lodged by consumers on the National Consumer Helpline (NCH),” the Consumer Affairs Ministry said in a statement calling the meeting recently.
In a recent letter to NRAI, Secretary, Department of Consumer Affairs, Rohit Kumar Singh pointed out that restaurants and eateries are charging service charges from consumers by default, even though the collection of any such charges is voluntary and with the consumers. be at discretion and not mandated by law.
It added that consumers are being misled on the legality of such charges and are being harassed by restaurants requesting removal of such charges from the bill amount. “Since this issue affects the consumers on a daily basis and has a significant impact on the rights of the consumers, the department considered it necessary to examine it closely and in detail,” the letter said.
The Department of Consumer Affairs published guidelines on levying service charges by hotels and restaurants in April 2017. The guidelines note that a customer’s entry into a restaurant cannot be construed as consent to pay service charges.
Ministry of Consumer Affairs in a statement recently said, “Any restriction on entry on consumer by forcing the consumer to pay service charge as a stipulation percentage for ‘restrictive trade practice’ under the Consumer Protection Act.” ” ,
The 2017 guidelines mention that the amount of a customer’s agreement to pay the prices displayed on the menu card along with applicable taxes upon placing an order, the statement said. It would be an unfair trade practice to charge for anything other than the above without the express consent of the customer as defined under the Act.
As per the guidelines, a customer is entitled to be heard and exercised his rights as a consumer under the provisions of the Act in case of unfair/restrictive trade practices. Consumers can approach the Consumer Disputes Redressal Commission/forum of appropriate jurisdiction, the statement said.
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