Consumer need not pay service charge, it is unfair trade practice: Ram Vilas Paswan

While service tax is a mandatory component in the restaurant’s bill, service charges by law has always been a voluntary component.

By: Express Web Desk | New Delhi | Updated: January 11, 2017 6:59 pm
Service charge, Restaurants service charge, Restaurants service tax, Consumers service charge Consumer Affairs Minister Ram Vilas Paswan (File Photo)

Close on the heels of Centre’s decision announcing that service charge on a food bill is not compulsory, Consumer Affairs Minister Ram Vilas Paswan on Wednesday echoed the government’s decision when he said consumers need not pay service charge, it is unfair trade practice. He also said the price list in hotel menu cards should reflect all costs, including service charge, adding that service charge paid by consumers should be given to poor waiters.

Paswan also mentioned that in future such cases would be addressed effectively as a provision has been made in the new Consumer Protection Bill to set up a regulator CCPA. The bill is likely to see the passage in the forthcoming budget session of Parliament.

Addressing the media on this issue, Paswan said: “Our Department’s view is that imposing service charge is an unfair trade practice and consumers need not pay.” There is no definition of ‘service charge’ in law but taking service charge without discretion of consumers is an “unfair trade practice”, he said.

While service tax is a mandatory component in the restaurant’s bill, service charges by law has always been a voluntary component. This charge, by law, is supposed to be levied only if the customer is happy with the service. The amount so collected goes to the accounts of the waiters which the restaurants deposit at regular intervals.

Earlier this week, the Union Consumer Affairs Ministry had said in an official statement that it has also asked the states to ensure that hotels/restaurants disseminate this information through displays at their premises. Arbitrary surcharge being levied as part of the bill by some hotels and restaurants in the name of service charge has been a major sore point with consumers, with many consumer rights groups also filing complaints with the government over this practice.

“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 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him,” the ministry had said.

(With PTI inputs)

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