Food and Consumer Affairs Minister Piyush Goyal claimed on Friday that restaurants cannot add a “service charge” to food bills, although customers can give “tips” separately at their discretion.
Goyal said if restaurant owners want to pay higher salaries to their employees, they are free to increase the rates on their food menu, as there are no price controls in the country.
He also rejected claims by restaurant owners that they would incur losses if the service charges were abolished.
On Thursday, the Department of Consumer Affairs said the government will soon come up with a legal framework to prevent restaurants from imposing service charges on customers, saying the practice is “unfair”.
“You (restaurants) can’t add a service charge to a bill… If you feel there are more benefits to be given to employees, it can’t be forced on customers. You can raise prices to give raises,” Goyal said. in response to a question about restaurant service charges.
The minister says the government is receiving complaints from consumers about the service costs that restaurants charge.
“You are free to give pay raises to employees and raise rates. But if there are hidden costs, how will people know the real price,” he said.
Goyal added that people leave tips when they find services to their satisfaction, and they can continue to do so.
The Department of Consumer Affairs held a meeting on Thursday with representatives of associations of restaurants and consumers.
After the meeting, Consumer Affairs Minister Rohit Kumar Singh said the government believes the practice of imposing service charges adversely affects consumers’ rights and is also an “unfair business practice”.
“We will soon be working on a legal framework because there were guidelines from 2017, which they have not enforced. The guidelines are generally not legally enforceable,” he had said.
The meeting was attended by representatives of the National Restaurant Association of India (NRAI), the Federation of Hotel & Restaurant Associations of India (FHRAI) and consumer organizations including Mumbai Grahak Panchayat and Pushpa Girimaji.
The secretary also announced that a framework will soon be drawn up on this that is legally binding for restaurants.
An official release had said the meeting discussed key issues raised by consumers on the department’s national consumer helpline.
These related to the mandatory levy of service charges, adding the surcharge by default without the express consent of the consumer, suppressing that such a surcharge is optional and voluntary, and embarrassing consumers if they resist paying such a surcharge. PTI LUX MJH NKD CS BAL