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Govt Questions Compulsory Inclusion of Service Charge, Calls For Meeting on June 2: NRAI Responds

The Department of Consumer Affairs had called for a meeting with restaurant owners on June 2. The issue in hand was the “arbitrarily high rates” that customers are being asked to pay as service charge.

On May 23, Consumer Affairs Secretary Rohit Kumar Singh expressed concerns that restaurants and eateries were supposed to collect service charges at the discretion of the consumers. These charges are now being collected by default. The letter written to National Restaurant Association of India (NRAI) said this practice has to be addressed.

The Department of Consumer Affairs (DoCA) – which comes under the Ministry of Consumer Affairs, Food and Public Distribution – is to meet with the National Restaurant Association of India to discuss the issues pertaining to Service Charge levied by restaurants.

However, yesterday, NRAI released a statement that read: ““Information regarding the amount of service charge is displayed by restaurants on their menu cards and otherwise also displayed on the premises, so that customers are well aware of this charge before availing the services.”

“Once the diner is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice.”

The decision to pay service tax was made optional in 2017 by the government. NRAI’s response reads that the service charge has always been a matter of “individual policy” and was never illegal.

The letter addressed to NRAI said that compulsorily including service was affecting many on an everyday basis. “Since this issue impacts consumers at large on a daily basis and has significant ramification on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail,” the letter read.

As per the guidelines published by The Department of Consumer Affairs in 2017, forcing a customer to pay service charge as a condition after to placing an order amounts to ’restrictive trade practice’.

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