Hotels can’t levy service charge on customers: Centre

The Central Consumer Protection Authority (CCPA) has issued guidelines here on Monday preventing hotels and restaurants from levying service charge on customers. Hotels or restaurants should not add service charge automatically or by default in the food bill, according to the guidelines.

The guidelines, issued by Nidhi Khare, Chief Commissioner, CCPA, adds that if any consumer finds that a hotel or restaurant is violating the guidelines, he or she may make a request to remove the service charge from the bill amount or lodge a complaint on the National Consumer Helpline (NCH). Complaints can be filed with the Consumer Commission too or with the District Collector.

“No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion. No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers. Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount,” the Consumer Affairs Ministry said in an official release.

Inherent in price

The Ministry said the National Consumer Helpline (NCH) has received a number of complaints by consumers against levying of service charge. The guidelines added that component of service is inherent in price of food and beverages offered by the restaurant or hotel. “Pricing of the product thus covers both the goods and services component. There is no restriction on hotels or restaurants to set the prices at which they want to offer food or beverages to consumers. Thus, placing an order involves consent to pay the prices of food items displayed in the menu along with applicable taxes. Charging anything other than the said amount would amount to unfair trade practice under the Act,” the guidelines added.

“No hotel or restaurant shall add service charge automatically or by default in the bill. Service charge shall not be collected from consumers by any other name ,” the guidelines said.