In a meeting called by the Department of Consumer Affairs on Thursday to seek clarification on restaurants levying service charge “by default” on consumers, the National Restaurants Association (NRAI) of India and The Federation of Hotel & Restaurant Associations of India (FHRAI) clarified that there was no illegality in levying such a charge.
The NRAI said that the information regarding the amount of service charge is clearly mentioned and displayed by restaurants on their menu cards to ensure that customers are well aware of this charge before availing of the restaurant’s services.
“If a customer is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice,” the NRAI said.
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“The customer has to exercise the option at that point of time on whether or not to accept the offer. The option cannot be exercised after consuming the food and complaining about the levy of service charge,” the NRAI added.
The association also said that various judicial orders have upheld the practice of levying service charge and that the association had conveyed the same to the Department of Consumer Affairs in 2017, and had also explained the issue to the Competition Commission of India on a query raised by them in January 2015.
NRAI President Kabir Suri said, “On behalf of the entire restaurant industry, we have firmly reiterated all these facts with the necessary proof to the Consumer Affairs Department. We argued that levying service charge is neither illegal nor an unfair trade practice as alleged.”
He added that the debate over service charge was creating “unnecessary confusion” and “disruption” in the functioning of restaurants.
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