Hotels and restaurants can’t levy service charge: CCPA rules

New Delhi, July 4: The Central Consumer Protection Authority (CCPA) on Monday barred hotels and restaurants from levying service charge by default in food bills, and allowed customers to file complaints in case of a violation of the norms. There should not be any collection of service charge by any other name, it added.

The hotels have to clearly inform the consumer that paying the service charge is at the consumer’s discretion, the CCPA said.

The guidelines empower consumers to complain against the practice under various provisions of the Consumer Protection Act, tagging it as an ‘unfair trade practice,’ and a violation of consumer rights.

“No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers,” it added.

CCPA also said that service charge cannot be collected by adding it along with the food bill and levying GST on the total amount.

If any consumer finds that a hotel or restaurant is levying service charge in violation of the guidelines, he or she can request the establishment concerned to remove it from the bill amount.

He said as a positive fallout of the decision, waiters and others in hotels might be tempted to provide better service to the customer in the hope of a good ‘tip’.

The CCPA, in the guidelines said a tip or gratuity is towards hospitality received beyond basic minimum service contracted between the consumer and the hotel management, and constitutes a separate transaction between the consumer and staff of the hotel/restaurant at the consumer’s discretion.

Only after completing the meal, a consumer may be in a position to assess the quality, as well as service, and decide whether or not to pay a tip, and if so, then how much.

The decision to pay a tip by a consumer does not arise merely by entering the restaurant or placing an order.

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