Hotels, Restaurants barred from levying service charges by default; Government issues guidelines

Service Charge in Restaurants law India: The Central Consumer Protection Authority (CCPA) issued the guidelines for preventing unfair trade practices and the violation of consumer rights with regard to levying of service charges in hotels and restaurants. The latest guidelines issued by CCAP stipulate that the hotels or the restaurants shall not add the service charge automatically or by default to the food bill. A number of complaints have been registered in the National Consumer Helpline by the consumers with regard to levying of the service charges by the hotels and restaurants.

No hotels or restaurants can add service charges automatically or by default in the food bill: Union Consumer Affairs Ministry

— ANI (@ANI) July 4, 2022

Hotels restaurants service charge: What are the latest guidelines issued by the Government?

1. The latest guidelines issued by the Central Consumer Protection Authority (CCPA) stipulate that hotels or restaurants shall not add the service charge automatically or by default to the food bill.

2. No collection of service charge shall be done by any other name. It added that no hotel or restaurant shall force a consumer to pay the service charge and shall clearly inform the consumer that the service charge is voluntary, optional, and at the consumer’s discretion.

3. No restriction on the entry or the provision of services based on the collection of service charges shall be imposed on the consumers.

4. The service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.

Hotels Restaurants Service Charge: What consumers can do against service charges?

If any consumer finds that a hotel or a restaurant is levying the service charge in violation to the guidelines, a consumer may make a request to the concerned hotel or restaurant to remove the service charge.

The consumer can also lodge a complaint on the National Consumer Helpline which works as an alternate dispute redressal mechanism at the pre-litigation level by calling 1915 or through the NCH mobile app.

Hotels Restaurants Service Charge: Background

A number of complaints were registered in the National Consumer Helpline by the consumers with regard to levying of service charge.

The issues raised by the consumers included restaurants making the service charge compulsory and adding it in the bill by default, suppressing that such charges are optional and voluntary and embarrassing consumers in case they resist paying service charge.