The Centre reiterated on Monday that customers dissatisfied with service could choose not to pay the service charge levied by a hotel or restaurant, but the National Restaurant Association of India (NRAI) cited judicial precedent to support its case for the levying of a service charge. It also issued a statement implying that customers were free not to eat at a restaurant if they did not wish to pay the service charge levied by it.
The government had clarified earlier in Parliament that the authorities could act against those levying a service charge without the knowledge and consent of consumers on charges of indulging in “unfair trade practices”. NRAI, which represents independent restaurants and chains, said levying service charge was a “common and accepted practice” that was “recognised as such” by various government departments.
A statement issued on Monday by the Union consumer affairs ministry said it had asked states to ensure hotels and restaurants displayed information that service charge was optional on their premises. The ministry said this was being done as it had received many complaints from customers who said they were being forced to pay service charge, in lieu of tips, of anything between 5% and 20% “irrespective of the kind of service provided”. The ministry said the Hotel Association of India, when asked for clarification, replied that a “service charge is completely discretionary” and a customer could have it waived.
Defending the levying of service charge, NRAI president Riyaaz Amlani said that restaurants clearly follow the very same Consumer Protection Act that is being used to justify the move to penalise those who levy it without the consent of consumers.
“The act stops us from indulging in any unfair method or deceptive practice. We clearly mention the service charge we levy on our menus. We are not indulging in any unfair trade practice,” he said, adding that they were employee incentives distributed evenly among the work force.
“This is all part of a bill on which the restaurants pay VAT while the employees pay income tax. It also does away with cash tips,” he said. Rather than scrap the service charge, Amlani said, many restaurants would politely ask customers if they were willing to pay a service charge and, if not, tell them they would have to dine at a place that didn’t levy one.
Another restaurateur said on condition of anonymity that the Department of Consumer Affairs should have waived the charge instead of leaving matters “ambiguous”. “The diner might say the entire meal was nice but the salad was bad. What are we supposed to do in such a scenario? Most complaints we receive are about higher taxes and not service charge. The government didn’t waive taxes but waived service charge that diners happily paid,” he claimed.
Chef and restaurateur Manu Chandra, who runs Monkey Bar outlets across India, said the move would result in a refactoring of prices as service charges were a way to remunerate staff. “Rentals, competition and salaries are rising. The restaurants will have to take a couple of days to work on alternate ways to meet these costs,” Chandra said.
Kabir Suri of Azure Hospitality said since service charge was based on customer discretion, diners would willingly reward good service. “Service charge is always discretionary and ranges between 5 to 20%. The worldwide thumb rule customers follow is 10 to 15%, and if you are not happy you may not pay as well. We feel if customers are overall pleased and looked after, they are likely to continue as per their comfort level,” he said.
Courtesy: Economic Times