Customers can now refuse to pay Service Charge at Restaurants

Customers can now refuse to pay Service Charge at Restaurants. Payment of service charge in restaurant is voluntary. Latest news! The Consumer Affairs Ministry has recently announced that now a customer can refuse to pay Service Charge at a Restaurant if we are not happy with their services. Now check more details for “Customers can now refuse to pay Service Charge at Restaurants” from below…

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It was announced on Monday by the Ministry that the payment of service charge by a customer is “completely discretionary and should a customer be dissatisfied with the dining experience, he/she can have it waived off”.

The Government has taken this initiative because they had received a number of complaints from the customers that they are being charged 5 – 20% Service Charges which is mandatory for them to pay. They were kind of forced to pay that, even though they were not satisfied with the services provided by the service providers. This was against the trade practices as prescribed by the Customer Protection Act, 1986 which says that a trade practice which adopts any unfair methods or deceptive practices is to be treated as an unfair trade practice.

The Hotel Association of India has also agreed in this matter stating that if a consumer is not satisfied with the services of restaurants or hotels, they can disagree to pay the service charges.

These are some of the FAQ’s associated with this announcement:

Question 1 – What were the rates of Services Charge Applicable?

Ans – Service Charges were applicable at the rate of 5 – 20%.

Question 2 – Are Service Tax & Service Charges the same?

Ans – No. They are different. Service Charges are income of the hotels/ restaurants while Service Tax has to be paid to the Government.

Question 3 – What are Service Charges?

Ans – Service Charges are also called as Tips. They are generally distributed among the staff members.

Question 4 – What if the consumers are still forced to pay the service charges?

Ans – They can lodge a complain to the Consumer Forum.

Question 5 – What is the conclusion of this announcement?

It states that the billing service charge in addition to taxes at hotels and restaurants is completely discretionary and if a customer is dissatisfied with their services/ experience, they can choose not to pay the service charge.

Official Notification

Restaurants billing ‘service charges’ in addition to taxes is optional: Department of Consumer Affairs 

Consumer has discretion to pay ‘service charge’ or not: Department of Consumer Affairs

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%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him. The Consumer Protection Act, 1986 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 and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices. In this context, the department of Consumer Affairs, Central Government has called for clarification from the Hotel Association of India, which have replied that the 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.

The Department of Consumer Affairs has asked the State Governments to sensitize 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.

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