Service Charge By Restaurants: Cant Add Charge In Food Bills, Says Piyush Goyal

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Food and Consumer Affairs Minister Piyush Goel on Friday stressed that restaurants cannot add “service charges” to food bills, although consumers can give “tips” separately at their discretion.
Goyal said restaurant owners are free to raise rates on their food menus if they want to pay their employees higher because there is no price control in the country. He also dismissed allegations by restaurant owners that stopping service charges would hurt them.

On Thursday, the consumer affairs ministry said the government would soon introduce a legal framework to allow restaurants to stop imposing service charges on customers because the practice was “unfair”.

“You (restaurants) cannot add service charges to a bill … if you think that employees need to pay more, it cannot be imposed on customers. You can raise prices to increase it,” said Gayal in response. A question about charges.

The minister said consumers were complaining to the government about the service charges of restaurants.

“You are free to hire employees. But if there is a hidden cost, how will people know the real price,” he said.

Goyal added that if people find the service to their satisfaction, they give up tips and they can continue. On Thursday, the Department of Consumer Affairs met with representatives of restaurants and consumer organizations.

(Also read: Service Charges at Restaurants: What You Need to Know About Ongoing Debates)

After the meeting, Consumer Affairs Secretary Rohit Kumar Singh said that the government felt that the practice of imposing service charges adversely affected the rights of consumers and was an “unfair trade practice”. “We will soon be working on a legal framework because there were guidelines for 2017, which they did not implement. The guidelines are generally not legally enforceable,” he said.

The meeting was attended by representatives of consumer organizations including National Restaurant Association of India (NRAI), Federation of Hotel and Restaurant Association of India (FHRAI) and Mumbai Consumer Panchayat and Pushpa Girimaji.

The secretary further said that a framework in this regard would be issued soon which would be legally binding on the restaurant. An official release said that during the meeting, major issues raised by consumers were discussed on the department’s national consumer helpline.

They were related to compulsory service charges, adding charges by default without the explicit consent of the consumer, suppressing such charges as optional and voluntary, and embarrassing if the consumer refuses to pay such charges.

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