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Service charge guidelines issued to ensure consumers have a choice: Centre to Delhi HC

The Ministry of Consumer Affairs and the CCPA in the application said more than 1105 complaints were registered by consumers on the National Consumer Helpline after the guidelines were issued, with regard to unfair levying of service charge.

Central Consumer Protection Authority (CCPA), delhi high court, National Restaurant Association of India and Federation of Hotel and Restaurant Associations of India, Delhi news, Delhi city news, New Delhi, India news, Indian Express News Service, Express News Service, Express News, Indian Express India NewsIn response to the petitions, the CCPA in a reply dated August 30 said such disclosure by the hotels and restaurants is not sufficient to assume that a consumer is ready and willing to pay the service charge. Mandatory service charge is directly in the teeth of the rights of consumers, it added.

Seeking vacation of the court-ordered stay on guidelines prohibiting hotels and restaurants from adding service charge automatically in the bill, the Centre and Central Consumer Protection Authority (CCPA) Wednesday told the Delhi High Court that an eatery is free to decide the prices for food and services and the guidelines only ensure that the consumers are given a choice to decide if they want to pay the service charge or not.

Granting time to the National Restaurant Association of India and Federation of Hotel and Restaurant Associations of India to respond to the government stand, Justice Yashwant Varma listed the matter for hearing on October 6. The court also extended the interim stay on the guidelines.

The Ministry of Consumer Affairs and the CCPA in the application said more than 1105 complaints were registered by consumers on the National Consumer Helpline after the guidelines were issued, with regard to unfair levying of service charge.

“The guidelines have been issued keeping in view numerous complaints by consumers across the country highlighting thay service charge has been collected involuntarily even when the service provided by the restaurant or hotel was dissatisfactory,” they said in the reply filed through advocate Sandeep Kumar Mahapatra.

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CCPA in the guidelines issued on July 4 had said that service charge shall not be collected from consumers by any other name. “Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount,” it said in guidelines issued to prevent unfair trade practices and protection of consumer interest with regard to levy of service charge in hotels and restaurants.

While hearing the petitions filed by NRAI and Federation of Hotel and Restaurant Associations of India, Justice Varma on July 20 stayed the CCPA guidelines subject to the members of the unions ensuring that the levying of service charge in addition to the price and taxes and the obligation of the customer to pay the same “is duly and prominently displayed on the menu or other places”.

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In response to the petitions, the CCPA in a reply dated August 30 said such disclosure by the hotels and restaurants is not sufficient to assume that a consumer is ready and willing to pay the service charge. Mandatory service charge is directly in the teeth of the rights of consumers, it added.

“When a consumer is availing the service of a hotel or restaurant, she/he is availing the services of the hotel or restaurant as a whole and is not taking any separate service from the staff/employees of the restaurant/hotel individually,” reads the reply, adding that onus of wages of employees or staff cannot be imposed on consumers.

First published on: 01-09-2022 at 00:14 IST
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