Service charge guidelines have no legality: NRAI

The National Restaurant Association of India (NRAI) on Wednesday said that the new government guidelines have no legal basis and have created unnecessary confusion among the consumers, leading to disruption in smooth business operations of restaurants.

"Guidelines by the very nature of things are only for guidance and in case there is a need for such change, there has to be either a new law or an amendment in the existing laws," the restaurant lobby says.

"It is also relevant to state that extra charges are being levied by many other industries, including some government agencies. However, the guidelines are issued only for the restaurant Industry," the industry body adds.

On Monday, the Central Consumer Protection Authority (CCPA) said that hotels or restaurants shall not add service charge automatically or by default in the food bill.

The guidelines were issued to prevent unfair trade practices and violation of consumer rights with regard to levying of service charge by hotels and restaurants.

"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," the guidelines say, adding that 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 rules say.

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

Also, 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.

The consumer may also file a complaint against unfair trade practice with the Consumer Commission. The consumer may also submit a complaint to the district collector of the concerned district for investigation and subsequent proceedings by the CCPA.

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 government had earlier expressed its displeasure over restaurants allegedly making service charges compulsory even though such charges are subject to the customer's discretion.