With CCPA Baring ‘Service Charge’, Food Bills In Restaurants Have Shrunk

The central government has put a seal on the debate of service charges being legal or illegal as the Central Consumer Protection Authority (CCPA) has come up with a helpline number 1915 for consumers who can complain in case of violation of their rights.

The CCPA has issued guidelines to protect consumer interest related to the levy of service charges in restaurants and hotels. Notably, the government established the CCPA under The Consumer Protection Act, 2019 in July 2020, with the aim of protecting, promoting and enforcing the rights of consumers and punishing those who violate them.

The authority has issued five major guidelines in which it has asked hotels and restaurants not to include service charges automatically or by default in the bill. It also said that service charges must not be added in the form of other names.

It added that no hotel or restaurant can force any consumer to pay a service charge. They also have to tell the consumer that the service charge is voluntary. The guidelines have also said that hotels and restaurants also cannot collect service charges by adding it alongside bills and levying GST on the total amount.

However, consumers too have a number of options in case they find service charge in the bill. Among the first things, they can request the hotel or restaurant to remove the service charge from the bill.

They can also lodge a complaint with the National Consumer Helpline (NCH) by dialling in 1915 or on the NCH app. They can also complain through the edaakhil portal, http://www.edaakhil.nic.in. Apart from these, they can also approach the district collector of the concerned district to probe the matter, followed by the proceedings by CCPA. The person can also directly send an email at the official email id com-ccpa@nic.in.

Reactions Of Restaurant Owners

Several restaurant and bar owners in Delhi opposed the CCPA guidelines barring them from levying service charges automatically or by default on food bills, saying it is “completely illegal and baseless”.

Restaurant owners asserted that the service charge was not levied discreetly as it is mentioned on the menu and the bill as well.

Meanwhile, Bruhat Bengaluru Hoteliers Association (BBHA) President PC Rao has welcomed the order. He was quoted by the media saying, "Only about 20 per cent of the restaurants in the city were levying these charges. The association believes that the consumers should not be burdened in any way. Hence, we welcome the decision.”

In an official statement, the BBHA said, "We welcome the new guidelines issued by CCPA. As per the guidelines, no hotelier can charge a service charge other than the food bill and GST. We are also in the opinion that this additional burden on our customers is not required, though a major part of this charge goes to our staff.”

The controversy over the service charge has been a hot topic in the industry for over a month, with the National Restaurants Association of India (NRAI) last month taking exception to the Department of Consumer Affairs' (DoCA) proposal to do away with the service charge. According to the NRAI, levy of service charge was very much legal.