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Happy eating! Service charge on food bill is not mandatory: Govt

In what could be a good news for those who love eating out in restaurants and hotels, the government on Monday stated that customers who are not satisfied with services in any hotel or restaurant need not pay the service charges.

Story: NEW | DELHI | 03rd January 2017, 12:00 Hrs

GOVT GETS INTO THE ACT

* State governments asked to sensitise hotels and restaurants regarding provisions of the Consumer Protection Act

* A trade practice which adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice

* A consumer can make a complaint to the appropriate consumer forum against such unfair trade practices

* Hotels and restaurants will be asked to put up a notice informing consumers that service charge is discretionary

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Service charge on a food bill is not compulsory and a customer can choose to have it waived if not satisfied with the experience, the government said in a statement.

The Department of Consumer Affairs, in a statement, also asked state governments to advise hotels and restaurants to disseminate information, such as through displays, that "the service charges are discretionary or voluntary".

Ram Vilas Paswan, Union Minister of Consumer Affairs tweeted that restaruants were billing service charges in addition to taxes and that “service charge is optional” and “Consumer has a discretion to pay or not.”

"A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20 percent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him," Union Consumer Affairs Ministry said in an official statement.

The Ministry had sought clarification from the Hotel Association of India, which replied that "service charge is completely discretionary and should a customer be dissatisfied with the dining experience, he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily."

Highlighting provisions under the Consumer Protection Act, 1986, the ministry said this law provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice.

A consumer can make a complaint to the appropriate consumer forum against such unfair trade practices.

"The Department of Consumer Affairs has asked the state governments to sensitise the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986...

"...And also to advise the hotels/restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the 'service charges' are discretionary/voluntary and a consumer dissatisfied with the services can have it waived off," the statement said.

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THE GOAN NETWORK / PANAJI

A number of restaurants in Goa too add a service charge, which in effect, is a tip to the waiter built in your bill. On the top of it, a number of consumers end up tipping the waiters as well.

Amey Naik, owner of Peep Kitchen in Caranzalem, said, “We don’t charge any service charge to our consumers. It is entirely upto the consumers to tip our waiters or not. We do charge service tax, which goes to the central government.”

Now, service tax is mandated by law and it goes straight to the central government. But, there is no law, which says that a service charge also has to be paid.

A chartered accountant said, “To pay service charge or not depends upon how you enter into a contract with a restaurant. You, as a consumer, will be required to pay a service charge if a restaurant says in its menu that there is a charge like this or if it has put up a notice to this effect. However, if the restaurant has not informed you about service charge before you order food, then you can dispute paying such a charge.”

Interestingly, the department of consumer affairs too has asked state governments to advise the hotels/restaurants to disseminate information through display at an appropriate place in their premises that the service charges are discretionary/voluntary and a consumer dissatisfied with the services can have it waived off.

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