The debate on the legality and ethical viewpoints on service charges levied by hotels and restaurants is going on for a very long time in India. However, people expect that the recent government order will put to rest the debate once and forever.
On Monday, Central Consumer Protection Authority (CCPA) bars restaurants and hotels from adding service charges automatically or by default to food bills. It also asks customers to file complaints if they find a restaurant in violation of the order.
For a very long time, customers were itched by the service charges levied by restaurants and hotels, which vary from 5% to 10%. Most restaurants have been exercising the practice of levying 10% service charges on top of the total bill amount. Amid the rising complaints against it by customers, CCPA issued guidelines for restaurants and hotels and instructed them to immediately seize unfair trade practices which are in a direct violation of consumer rights in relation to levying service charges.
According to the guidelines, no hotel or restaurant can automatically add service charges or by default to the bill. To avoid any ambiguity and add transparency to the instruction it also said warned restaurants and hotels against collecting service charges by any other name.
Going further, no restaurant or hotel can force a customer to pay a service fee. They must clearly inform the customer that the service charge is voluntary, optional, and it’s up to the customer to decide whether he wants to pay the same or not.
The guideline also stated that consumers should not be restricted from accessing or providing services based on the collection of service charges.
Additionally, the service charge cannot be added to the food bill or levy GST on the total bill amount.
Any consumer who finds that a restaurant or hotel is in violation of these guidelines by charging a service fee can ask the establishment to deduct the amount.
If a restaurant or hotel forces a customer to pay service charges, customers must immediately call the National Consumer Helpline (NCH) by calling 1915, or using the NCH mobile application to complain about the same. Due to any reason, if they can’t get immediate assistance on the helpline number of apps, they can also file complaints with The Consumer Commission by producing the bill later on.
The restaurant industry, however, finds the order disappointing and discouraging. Arguing that the hotel & restaurant industry is not the only industry where the service charges exist, many owners question the intention behind the selective target. To a certain extent, their argument seems quite valid as well. Aggregators levy it in a name of delivery fee in spite of cutting a commission deal with restaurants, ticketing platforms collects it in the name of convenience fee, and airports levy various sorts of fees and surcharges.
In the light of such arguments, labeling service as illegal only for the hotel & restaurants industry seems to be quite unjustified.
All said and done, the matter doesn’t appear to be that simple, as the government and industry stakeholders attempt to break the logjam. With a mutual agreement yet to be arrived at by both parties, for now, the restaurant industry has no other option but to comply with the latest order from CCPA.