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Hotels & restaurants shall not add service charge to food bill: CCPA
Wednesday, 06 July, 2022, 08 : 00 AM [IST]
Ashwani Maindola, New Delhi
The Central Consumer Protection Authority (CCPA) under the Consumer Affairs Ministry has ruled that hotels or restaurants shall not add service charge automatically or by default to the food bill.

The Authority has issued detailed guidelines, in this regard, terming the decision to prevent ‘unfair trade practices and violation of consumer rights’ by means of levying service charge in hotels and restaurants.

The guidelines issued by CCPA stipulate that hotels or restaurants shall not add service charge automatically or by default to the food bill. No collection of service charge shall be done by any other name. No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion. No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers. Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.

The guidelines say that the aggrieved customer can approach the Consumer Commission directly or submit a complaint to the District Collector in this regard or write to the Authority via mail. According to the Department of Consumer Affairs, the National Consumer Helpline (NCH) received a large number of complaints with regard to levying of service charge. Complaints include restaurants making service charge compulsory and adding it in the bill by default, suppressing that paying such charge is optional and voluntary and embarrassing consumers in case they resist paying service charge.

Meanwhile, reacting to the decision, Gurbaxish Singh Kohli, VP, Federation of Hotel & Restaurant Associations of India (FHRAI), says that most of these guidelines issued by CCPA are already followed by hotels & restaurants, however, It was extremely disheartening that the hospitality industry was constantly singled out.

"We have explained over and over again that there is nothing illegal in collecting a service charge. It is a charge collected for the benefit of the staff, which includes everyone from the waiters to the personnel working in the kitchen who have served a consumer directly and indirectly. Besides, no hospitality establishment coaxes a consumer to pay it if for any reason they choose not to. But the industry is being painted as the black sheep in the eyes of the consumer for no reason. Ironically, there are several online websites and apps that charge convenience fees including the Government-run IRCTC. These do not even explain what the charge is for nor is the consumer given a choice to opt out of it. We ask the Government to introduce a law that is uniform to all businesses and that the hospitality industry is not discriminated against. We are an industry that creates jobs and at the end of it, any kind of ruling or order against the service charge will be detrimental to employees since they are the ones who will suffer,” Kohli remarked.

Pradeep Shetty, joint secretary, FHRAI, stated, “FHRAI may approach the CCPA seeking clarifications and to submit further suggestions. Unfortunately, the beneficial global practice for employees will take a beating. FHRAI will issue a detailed statement after examining and studying the guideline.”

However, the NRAI (National Restaurant Association of India) declined to comment on the ruling by CCPA, when contacted.
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