SERVICE CHARGES ON BILLS

IS IT MANDATORY TO PAY SERVICE CHARGE ON BILLS ? 

 

Have you ever seen a poster in front of a Cafe, Restaurant or Hotel saying "We levy this% of Service charge on bill" ? 

-Let's recall the times when you have tipped the waiter. Even if you haven't you have been made to do so. Yes, every time. If you notice some of these high end Cafe, Restaurants and Hotels levy Service Charge just as GST in the contents of the bill.

They do treat Service charge as a mandatory part of the bill, no matter how the service even was or you want to tip for service. While it is absolutely is not mandatory. 

Service Charge

To be clear:

In January 2017, Food and Consumer Affairs Minister Ram Vilas Paswan in a tweet about the government-approved guidelines on service charge tweeted, “Service charge on hotel and restaurant bill is “’totally voluntary’ and not mandatory.”

Subsequently in July 2017, the department of consumer affairs said that it is illegal for restaurants and eateries to unilaterally levy a service charge. The department also urged diners to approach the consumer forum in case restaurants were levying service charge. While this is the legal reality, it is pertinent to understand how many diners would actually know about the consumer forum and how it works.

Vijay Gopal, an irate customer from Hyderabad, filed a complaint with the consumer forum resulting in a first-of-its kind action when the forum came down heavily upon a restaurant in the city for levying service charge on a diner. Vijay Gopal, the petitioner, had visited the restaurant and was charged Rs. 213 as service charge.

The forum directed the restaurant to not mention, add or collect service charge from customers in the future and leave the option – of paying or not paying – open. 

“The restaurant has no legal right to mention service charge at 10% of the bill. It is the discretion of the customer to pay the amount if he likes the services.” 

-The forum also directed the restaurant to refund the service charge and pay an additional Rs. 5,000 to the petitioner towards the costs he incurred in filing the case, Also in a recent case where a multinational food chain was directed to pay Rs 4,000 to its customer for charging Rs 57.36 as service charge.

During the trial, the Consumer forum observed that the guidelines issued by the Union Ministry of Consumer Affairs specifically provide that service charge is payable voluntarily by the customer. But in this case, the complainant has been forced to pay the service charge. Thus, the opposite party adopted an unfair trade practice, the forum observed.