Paying service charge in restaurants not mandatory, say govt guidelines

It is not mandatory for customers to pay service charges in hotels and restaurant bills, Food and Consumer Affairs Minister Ram Vilas Paswan said on Friday, after the Centre approved the guidelines.

“The government has approved guidelines on service charge. As per the guidelines, service charge is totally voluntary and not mandatory now,” Paswan said in a tweet, adding that “guidelines are being sent to States for necessary action at their ends.”

As per the guidelines, the column of service charge in a bill will be left blank to customers to fill up before making the final payment.

“Tip and gratuity paid by a customer is towards hospitality received by him/her beyond the basic minimum service already contracted….It is a separate transaction between the customer and the staff of the hotel or restaurant, which is entered into, at the customer’s discretion,” say the guidelines.

If a restaurant insists on customers paying the service charge, they can file a complaint in consumer court, say the guidelines.

Making a clear distinction between fair and unfair trade practice, the guidelines also say that the pricing of products should reflect both the goods and services component. “Placing of an order by a customer amounts to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes. Charging for anything other than the aforementioned, without express consent of the customer, would amount to unfair trade practice….”

Hotel and restaurant associations, however, were unhappy with the guidelines. Dilip Datwani, President, Hotel and Restaurant Association of Western India, said: “Service charge is a global practice and one that has been in force in India for more than half a century. The charge is neither hidden nor disguised. It is categorically and boldly mentioned in the menu… We cannot understand why we are being singled out.”

Riyaaz Amlani, President, National Restaurant Association of India, said: “Guidelines are not laws. The present statement by the government is causing unnecessary confusion in public… It is once again reiterated that as of now levy of service charge by restaurants is legal and does not violate the provisions of Consumer Protection Act, 1986, since the same is mentioned in the menu/price list and informed to the customer…Unless there is a legislation, restaurants will continue to levy service charge. ”

The guidelines also say that the pricing of products should reflect both the goods and services component.

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