Eating out? You need not pay service charge, says Central government

Have you ever had to pay hefty service charges when eating out, even if the service was not all that good? The Central government has now said that eateries — restaurants, pubs, hotels, cafes, takeaways and other such establishments — cannot force you to pay service charges and it is entirely up to you whether you want to pay it or not.

The Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Public Distribution has said in a statement that not only is payment of service charge entirely upon the customer’s discretion, but also that state governments should instruct all eateries to put out prominent display boards informing their patrons that service charges are entirely discretionary and voluntary, and they may not pay it if they did not like the service.

The department said in the statement: “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 percent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him.”

It then cites the Consumer Protection Act of 1986 to say that “a trade practice which, for the purpose of promoting sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices.”

This effectively means, the department just told eateries that if they ask people to pay service charge mandatorily, it could be considered an “unfair trade practice.” And even the hoteliers’ association, in a reply to the department, said as much.

The department said in its statement: “In this context, the Department of Consumer Affairs has called for clarification from the Hotel Association of India, which have replied that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he or she can have it waived. Therefore, it is deemed to be accepted voluntarily.”

Bottom line: Service charges are not mandatory. Don’t like the service? Don’t pay. And if the hotel makes you pay it, complain to the consumer forum and it will be redressed.

Also, eateries are now bound by the Central government’s order to tell their patrons that service charge is not mandatory and need not be paid if the service is bad.