Taking up cudgels on the behalf of consumers, Union minister Ram Vilas Paswan on Wednesday said levy of service charge on food and drinks by hotels and restaurants is an unfair trade practice, which need not be paid.
He, nevertheless, expressed helplessness in acting against errant players, citing inadequate powers.
Paswan assured that once the new consumer protection law is enacted and the proposed Central Consumer Protection Authority (CCPA) is set up, such grievances would be addressed effectively.
CCPA will have powers to take suo moto action in such cases. The consumer protection bill, 2015, is awaiting parliamentary approval and might be passed in the coming budget session.
Service charge is a tip paid to waiters voluntarily, but there have been recent complaints that hotels and restaurants are adding 5-20 per cent service charge in bills.
The Indian Hotel Association has already clarified that payment of service charges is not mandatory for consumers. However, there are still complaints of some restaurants and hotels insisting on payment of the same.
Paswan said consumers have the freedom not to pay the service charge and can decide not to eat there if they are informed in advance about it through the menu card.
The consu­m­er affairs mi­n­ister told reporters, “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 levying it without discretion of consumers is an “unfair trade practice,” he said.
Paswan also said consumers should be informed about service charge in the menu card and not in the bill. “The price list in the menu card should reflect all inclusive costs including service charge,” he said.
He also argued there is no need to take service ch­arge from consumers as pri­ce of each food item quoted in the menu is arrived at af­ter factoring in all expenses. “In fact, hotels and resta­u­rants should not dem­a­nd even room service charge additionally,” he said.
The minister also said there is no transparency on whether service charge collected from consumers is transferred to waiters. “Ideally, service charge should be given to poor waiters. There is no transparency at present,” he added.
Asked about action is bei­ng taken against hotels, rest­a­urants to curb the practice, consumer affairs secretary Hem Pande said, “They also know that they are doing wrong. We had a meeting with them on Tuesday. We told them to come up with suggestions to address the problem.”