Why is service charge still levied, govt to ask eateries | India News – Times of India

NEW DELHI: Union consumer affair secretary Rohit Kumar Singh, in a letter to the National Restaurant Association of India summoning them for discussions on the continued practice of imposing service charge, has cited the guideline issued by the ministry in April 2017 and said forcing consumers to pay service charge as a condition precedent to placing an order amounts to a “restrictive trade practice” under the Consumer Protection Act. He has also flagged that consumers are also being misled on the legality of such charges and harassed by restaurants on making a request to remove such charges from the bill amount.
Restaurateurs also say service charge is optional and if diners want they can have it waived. Whenever a customer asks, the charge is waived but such requests are very few and far between, explains a restaurateur. He says service charge is 10% of the total bill and that money goes to the staff. Diners like this standardization than earlier days of staff standing on their heads in anticipation of a tip post a meal, making it awkward for guests to decide the amount.
Restaurateur Joy Singh says a service charge is like an employee benefit scheme as the entire amount collected goes to the workforce. He says in a restaurant there is food and beverage on offer and there is service.
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 paying service charge — will be discussed during the meeting.
The ministry’s 2017 circular had clearly mentioned that a component of service is in provision of food and beverages ordered by a customer. “The pricing of the product, therefore, is expected to cover both goods and service components.”
It also said that placing of an order by customers amounts to their agreement to pay the prices displayed on the menu card along with the applicable taxes.