Eating at restaurants, hotels to be cheaper; govt says service charge on bill not compulsory

Customers dissatisfied with service at any hotel or restaurant can opt to seek that service charge not be levied, as this is optional or discretionary as per the Consumer Protection Act, an official statement said on Monday.

New Delhi: In what could be a good news for those who love eating out in restaurants and hotels, the government on Monday stated that customers who are not satisfied with services in any hotel or restaurant need not pay the service charges.

Service charge on a food bill is not compulsory and a customer can choose to have it waived if not satisfied with the experience, the government said in a statement.

The Department of Consumer Affairs, in a statement, also asked state governments to advise hotels and restaurants to disseminate information, such as through displays, that "the service charges are discretionary or voluntary".

Ram Vilas Paswan, Union Minister of Consumer Affairs tweeted that restaruants were billing service charges in addition to taxes and that “service charge is optional” and “Consumer has a discretion to pay or not.”

Restaruants are billing service charges in addition to taxes. Service charge is optional . Consumer has a discretion to pay or not.

— Ram Vilas Paswan (@irvpaswan) January 2, 2017

"A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20 percent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him," Union Consumer Affairs Ministry said in an official statement.

The Ministry had sought clarification from the Hotel Association of India, which replied that "service charge is completely discretionary and should a customer be dissatisfied with the dining experience, he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily."

Highlighting provisions under the Consumer Protection Act, 1986, the ministry said this law provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice.

A consumer can make a complaint to the appropriate consumer forum against such unfair trade practices.

"The Department of Consumer Affairs has asked the state governments to sensitise the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986...

"...And also to advise the hotels/restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the 'service charges' are discretionary/voluntary and a consumer dissatisfied with the services can have it waived off," the statement said. 

With PTI Inputs