- Service charges applied in lieu of tips cannot be forced on you
- Hotel association says up to you to decide on paying service fee
- Government says payment has to be voluntary
The government has clarified that the service charge -which ranges from 5 to 20 percent and is added to bills instead of tips - cannot be mandatorily applied by restaurants. The Departrment of Consumer Affairs said the automatic applying of a service fee violates fair trade practices.
"Restaruants (sic) are billing service charges in addition to taxes. Service charge is optional. Consumer has a discretion to pay or not," tweeted Consumer Affairs and Food Minister Ram Vilas Paswan.
The Hotel Association of India has confirmed that "the 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" according to a statement by the government.
State governments have been asked to ensure that restaurants and hotels are made aware of the new policy and that notices must be put up informing customers that service charge is discretionary and can be waived for an unhappy customer.
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%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him. The Consumer Protection Act, 1986 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 and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices. In this context, the department of Consumer Affairs, Central Government has called for clarification from the Hotel Association of India, which have replied that the 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.
The Department of Consumer Affairs has asked the State Governments to sensitize 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.
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