CCPA's restaurant service charge guidelines have no legality: NRAI

According to the NRAI, the government cannot bring about a change insofar as a levy of service charge is concerned by making guidelines

Restaurants
Photo: Bloomberg
IANS New Delhi
3 min read Last Updated : Jul 06 2022 | 1:21 PM IST

The fight over service charge at restaurants escalated as the National Restaurant Association of India (NRAI) on Wednesday said that the new government guidelines have no legal stand and have created unnecessary confusion among the consumers, leading to disruption in smooth business operations of hotels and restaurants.

The Central Consumer Protection Authority (CCPA), which comes under the Ministry of Consumer Affairs, has issued guidelines for preventing unfair trade practices and violation of consumer rights with regard to the hotels and restaurants levying service charge, stating that the consumer may lodge a complaint with the National Consumer Helpline (NCH) against such practice.

The NRAI, which represents more than five lakh restaurants in the country, said in a statement that through these guidelines, there is an attempt to start a campaign against the restaurant industry practice without any legal basis.

According to the NRAI, the government cannot bring about a change insofar as a levy of service charge is concerned by making guidelines.

"Guidelines by the very nature of things are only for guidance and in case there is a need for such change, there has to be either a new law or an amendment in the existing laws," it stated.

"It is also relevant to state that extra charges are being levied by many other industries, including some government agencies. However, the guidelines are issued only for the restaurant Industry," the hotel industry body emphasised.

It said that service charge is part of the owner's discretion and decision regarding the total price payable by a customer with regards to sale or service of a product.

"The customer is made aware of the pricing and its components before the customer places an order for the product. Once the customer places the order after being made aware of the terms and conditions there comes into existence a binding contract," said NRAI.

No authority can interfere with binding nature of a valid contract until and unless it is shown and proved to be unconscionable or against any unfair trade practice, the industry body argued.

The guidelines issued by the CCPA stipulate that hotels or restaurants shall not add service charge automatically or by default in the food bill.

"No collection of service charge shall be done by any other name. No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary/optional and at the consumer's discretion," the new guidelines read.

The CCPA said that the consumer may make a request to the concerned hotel or restaurant to remove service charge from the bill amount. The consumer may also file a complaint against unfair trade practices with the Consumer Commission.

--IANS

na/dpb

 

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

More From This Section

Topics :NRAIService chargeservice charge by hotels

First Published: Jul 06 2022 | 1:21 PM IST

Next Story