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Service Charges by Restaurants: Can’t Add Charges to Food Bills, Says Piyush Goyal

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Food and Consumer Affairs Minister Piyush Goyal on Friday said restaurants cannot add ‘service charge’ to the food bill, although customers can give separate ‘tips’ at their discretion.
Goyal said that if restaurant owners want to pay higher wages to their employees, they are free to increase rates on their food menus as there are no price controls in the country. He also rejected the contention of restaurant owners that they would be at a loss if the service charge was removed.

On Thursday, the consumer affairs ministry said the government would soon bring in a legal framework to stop levying service charges on customers as the practice is “unfair”.

Goyal replied, “You cannot add service charge to the (restaurant) bill… If you feel that some more benefits are to be given to the employees, then it cannot be imposed on the customers. Can raise the price.” A query on the issue of service charges by the restaurant.

The minister said that the government has been receiving complaints from the consumers regarding the service charges being levied by the restaurants.

“You are free to pay salaries to employees and increase rates. But if there are any hidden costs, how will people know the real cost,” he said.

Goyal also said that people leave suggestions if they find services to their satisfaction and they can continue to do so. On Thursday, the Department of Consumer Affairs held a meeting with representatives of restaurants and consumers’ associations.

(Also Read: Service Fee In Restaurants: All You Need To Know About The Ongoing Debate)

After the meeting, Consumer Affairs Secretary Rohit Kumar Singh said the government is of the view that the practice of levying service charges adversely affects the rights of consumers and is also an “unfair trade practice”. “We will soon work out the legal framework as there were 2017 guidelines, which they have not implemented. Guidelines are generally not legally enforceable,” he said.

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

The Secretary also informed that a framework in this regard would be issued soon which would be legally binding for the restaurants. An official release said that the major issues raised by consumers on the department’s National Consumer Helpline were discussed during the meeting.

They pertained to the mandatory levy of service charges, adding charges by default without the explicit consent of the consumer, that such charges are optional and voluntary, and embarrassment of consumers when they opted to pay such charges.

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