INDIA SET TO BAN SERVICE CHARGE IN ALL ITS HOTELS AND RESTAURANTS

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The government plans to issue an advisory to states and union territories, endorsed by the Prime Minister’s Office, to stop the imposition of service charges by restaurants and hotels in bills for food and drinks as it is an illegal practice.

A few months back, the Food and Consumer Affairs ministry had sent an advisory to states directing them to stop this illegal practice, but some states did not act on it, following which the department has now decided to take the help of the Prime Minister’s Office.

‘Service charge does not exist. It is being wrongly charged. We have prepared an advisory on this issue. We have sent it to the PMO for approval,’ Ram Vilas Paswan told. The advisory will also be useful for Voluntary Consumer Organisations (VCOs) fighting for consumer rights, a senior official said.

No customer should be forced to pay service charges. If customers want, they can pay a tip to waiters or give their consent to levy the charge in the bill. The levying of service charge without seeking customer consent will be considered as unfair trade practice under the Consumer Protection Act.

The ministry has received a number of complaints from consumers about hotels and restaurants levying a ‘service charge’ in the range of 5-20%, in lieu of tips, which a consumer is to forced pay irrespective of the kind of service provided to him. Highlighting provisions under the Consumer Protection Act, 1986, the ministry had said a consumer can make a complaint to the appropriate consumer forum against unfair trade practices.

The minister also said there was no provision under the existing law to take action against hotels and restaurants. However, he added that in future such cases would be addressed effectively, by the Central Consumer Protection Authority (CCPA) proposed in the new Consumer Protection Bill.

On food wastage at hotels and restaurants, Paswan said the government will not bring a law or issue any advisory, rather it will encourage them to take voluntary steps. Hotels and restaurants have been asked to take voluntary measures such as training its staff to create awareness amongst customers on portion of dishes served.

Paswan further stated that he had taken steps to enforce the sale of bottled water at the official minimum retail price (MRP). At the Centre’s intervention, global soft drinks giant Pepsico has started selling mineral water bottles at the same rates, irrespective of the place of sale.

‘BCCI has also assured the ministry and also sent a directive to all the cricket stadiums, which it gives recognition that no packaged food items would be sold at different prices inside and outside the stadiums during the current IPL series and also otherwise,’ Paswan said.

On the issue of disclosure of food portions to check wastage, the minister said the he has held extensive discussion with hotel and restaurant owners. The big hotels and restaurants said that first they would sensitize their staff to make the customers aware of the size of each portion.

Some hotels have assured that they on their own would try to lower wastage. He also said that no law or questionnaire is being prepared to check the size of portions served in restaurant menus and compliance would be voluntary.

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