DORC, Department of Consumer Affairs has announced that it will come up with a new framework on service charges imposed by the restaurants and hotels that cause issues to the customers.
NRAI Issues Clarification
Post this National Restaurant Association of India (NRAI)has issued a clarification about service charges.NRAI has been emphasizing on the fact that the final decision by the Department of Consumer Affairs is yet to be taken.
See the tweet here,
On June 2, 2022, DORC organized a meeting with consumer organizations and restaurant associations. DORC secretary Rohit Kumar Singh headed the meeting .The meeting was attended by major restaurant associations, consumer organizations, Federation of Hotel and Restaurant Associations of India (FHRAI), and NRAI.
The restaurant associations clarified the issue stating that if the service charge is already mentioned in the menu and is visible to consumers, then it is being paid by them with consent. It is used by restaurants and hotels to pay their staff and workers. Service charge is not paid by the consumers for the food they are served. On the other hand, consumer organizations observed service charges as an unfair practice by restaurants and hotels.
NRAI President Kabir Suri said, “neither illegal, nor an unfair trade practice as alleged, and this debate in public domain is creating unnecessary confusion and disruption in smooth operations of restaurants.”He further added, “The service charge is transparent, worker friendly and is also recognised by many judicial orders which have been shared with the department. In addition, the government also earns revenue from the service charge as tax is paid by restaurants on the same,”
FHRAI Also Favors Service Charge
The Federation of Hotel & Restaurant Associations of India also justified the service charge.FHRAI vice president Gurbaxish Singh Kohli said,”… a service charge is meant for the benefit of the staff and so, some establishments make a conscious choice to adopt a policy beneficial towards its staff members. Levying service charges is a general practice adopted across the globe. It is neither illegal nor violating any law. Each establishment is free to create its own policy in this regard,”.
