Service Charge: What Can You Do If Restaurants, Hotels Still Ask You To Pay This Extra Levy?


Service Charge: The Central Consumer Protection Authority (CCPA) has issued guidelines to prevent unfair trade practices and the violation of consumer rights with regard to levying of the service charge in hotels and restaurants. The guidelines has stipulated that hotels or restaurants shall not add service charge automatically or by default in the food bill. Here’s all about the issue and what you can do if you are asked to pay the service charge at hotels and restaurants:

What Is The Issue?

The collection of service charge has been voluntary and at the discretion of consumers and not mandatory as per law. However, the consumer affairs department was getting complaints from consumers about restaurants making such charge compulsory.

The complaints included that restaurants were 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 from paying the service charge.

Following this, the Department of Consumer Affairs called a meeting with restaurants and hotels on June 2, in which the levy of service charge was discussed. The consumer affairs ministry during the meeting called the service charge illegal and asked the National Restaurant Association of India (NRAI) to immediately stop the practice. It also said the government will come up with a legal framework on this.

What Are The Guidelines?

Now, the CCPA has issued fresh guidelines on the levy of the service charge a month after the meeting between the NRAI and the government officials. It says:

1) Hotels or restaurant shall not add service charge automatically or by default in the food bill;

2) No collection of service charge shall be done by any other name;

3) 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;

4) No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers; and

5) Service charge will not be collected by adding it along with the food bill and levying GST on the total amount.

What A Customer Can Do If Asked To Pay Service Charge?

The CCPA guidelines say that if any consumer finds that a hotel or restaurant is levying service charge in violation to the guidelines:

1) a consumer may make a request to the concerned hotel or restaurant to remove service charge from the bill amount;

2) The consumer may lodge a complaint on the National Consumer Helpline (NCH), which works as an alternate dispute redressal mechanism at the pre-litigation level by calling 1915 or through the NCH mobile app;

3) The consumer may also file a complaint against the unfair trade practice with the Consumer Commission. The Complaint can also be filed electronically through e-daakhil portal www.e-daakhil.nic.in for its speedy and effective redressal;

4) The consumer may also submit a complaint to the District Collector of the concerned district for investigation and subsequent proceeding by the CCPA

5) The complaint may also be sent to the CCPA by e-mail at com-ccpa@nic.in.

“A number of complaints have been registered in the National Consumer Helpline (NCH) by consumers with regard to levying of service charge. The issues raised by consumers 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,” the Ministry of Consumer Affairs said in a statement on Monday.

It added that various cases relating to levying of service charge have also been decided by consumer commissions in favor of consumers, holding the same as an unfair trade practice and in violation of consumer rights.

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