Hotels, restaurants barred from levying service charges by default – Times of India

New Delhi: Central Consumer Protection authority (CCPA) on Monday barred hotels and restaurants from levying service charges automatically or by default in food bills. It allowed customers to register complaints in case of violation of consumer commissions including ‘e-filing’ and even district collectors.
Authority, established under consumer protection act, has issued detailed guidelines specifying the duties of eateries and the rights of customers and termed the levy of service charges as “unfair trade practice”. It has prohibited eateries from charging such fees by any other name. The CCPA also said that hotels and restaurants should not link customer entry and food consumption with service charges. As per the guidelines, customers should be informed that any such payment is at their discretion.

The authority has said that the service component is contained in the price of the meal, which includes both the content and the service. “There is no restriction on hotels or restaurants to set the prices at which they want to offer food or beverages to customers. Thus placing an order involves agreeing to pay the prices of the food items displayed on the menu along with applicable taxes. Charging anything other than the said amount would amount to unfair trade practice under the Act,” the guidelines stated.
Gurbakshish Singh Kohli, Vice President Association of Hotel and Restaurant Associations of India, said that they are following most of the guidelines issued by the CCPA. There is nothing illegal in collecting service charges, he added. “It is a fee collected for the benefit of employees, which includes everyone from waiters to kitchen workers who have served the consumer directly and indirectly. Further, no hospitality establishment persuades a consumer to pay it if they do not wish to do so for any reason whatsoever. But without any reason the industry is being portrayed as a black sheep in the eyes of the consumer,” he said.
TOI on Saturday had reported on the government’s move for new provisions to do away with service charges completely and empower customers to file complaints if the amount is added automatically.
The authority said that a tip or gratuity is a payment made by the customers directly to the hotel staff and it is only after completing the meal that one is in a position to decide whether to pay the tip or not and how much.