Rohit Kumar Consumer Affairs Secretary, The government will soon come out with a legal framework to stop restaurants levying service charges on customers as the practice is “unfair”

Generally, customers get confused between service charge and service tax and pay it.

After a meeting with representatives of associations of restaurants as well as customers, Rohit Kumar said that even if the associations claim the practice is legal, the Department of Consumer Affairs is of the view that it unpleasantly affects the rights of the consumers and it is an “unfair trade practice”.

He further added, “We will soon make a legal framework as there were 2017 guidelines which they have not implemented. Guidelines are generally not legally enforceable.

The meeting was attended by representatives of the National Restaurant Association of India (NRAI), the Federation of Hotel & Restaurant Associations of India (FHRAI), and consumer organizations.

Representatives of NRAI and FHRAI said in the meeting that levying service charges is not illegal.

A major issue raised by the customers on the NATIONAL CONSUMER HELPLINE of the Department was discussed. And issues were related to the compulsory levying of service charge, adding the charge by default, without consent of customers overpowering that such charge is optional and voluntary, and embarrassing consumers if they fight to pay such charge.

Consumer organizations are of the view that levying the service charge is licentious and constitutes an unfair and restrictive trade practice under the Consumer Protection Act.

They further said that since there is no bar on restaurants and hotels to fix the prices of their food, therefore levying additional charges in the name of service charges is prejudicial to consumer rights.

NRAI chief Kabir Suri said levying service fees is “neither illegal, nor an unfair trade practice as alleged, and the debate in the public domain is creating unnecessary confusion and disruption in the smooth running of restaurants.”

FHRAI, too, said that a restaurant collecting service charge is neither illegal nor is in violation of the law.

FHRAI said the charge is disclosed in advance and printed in the bill as “Charge” as a separate headline and not as “tax”.Thus,  there is Complete Transparency.

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