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No illegality in restaurants levying service charge, matter of individual policy: NRAI

No illegality in restaurants levying service charge, matter of individual policy: NRAI

No illegality in restaurants levying service charge, matter of individual policy: NRAI
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By CNBCTV18.com May 24, 2022 10:50 PM IST (Published)

The National Restaurant Association of India's (NRAI) response comes a day after the Consumers Affairs Ministry said it has called a meeting on June 2 with the NRAI to discuss the growing complaints that consumers are being forced to pay service charge

The National Restaurant Association of India (NRAI) on Tuesday issued a statement saying there is no illegality in levying service charge.

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"The levy of service charge by a restaurant is a matter of individual policy
to decide if it is to be charged or not. There is no illegality in levying such a charge," the NRAI statement said.
The association's response comes a day after the Consumers Affairs Ministry said it has called a meeting on June 2 with the NRAI to discuss the growing complaints that consumers are being forced to pay service charge. The meeting comes after the Ministry took notice of a number of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH).
Consumer Affairs Secretary Rohit Kumar Singh had also written to the NRAI President pointing out that restaurants and eateries were collecting service charge from consumers by default, even though the same was voluntary. In the letter, the secretary also pointed that consumers were forced to pay service charge, often fixed at arbitrarily high rates by restaurants.
"Consumers are also being "falsely misled" on the legality of such charges and harassed by restaurants on making a request to remove such charges from the bill amount. Since this issue impacts consumers at large on a daily-basis and has significant ramification on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail," the letter had added.
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On Tuesday, the NRAI also said that restaurants mention or display information regarding the amount of service charge on their menu cards and on their premises, so customers are aware about the same before availing the services.
"Once the customer is made aware of such a charge in advance and then decides to play the order, it becomes an agreement between the parties and is not an unfair trade practice," the NRAI said, adding that GST is paid as well to the government on the said charge.
The Ministry on Monday said that during the June 2 meeting, it plans to discuss consumer complaints on inclusion of service charge in the bill in the guise of some other fee or charge. The meeting will also deliberate how consumers are kept in the dark that paying service charge is optional and voluntary and how they are made to feel embarassed in case they resist from paying the service charge, it said.
The NRAI said that the matter had come up in 2016-17 too and the association had given a response to the government then. "There is nothing new which has been communicated by the department in its letter for the meeting on June 2," the NRAI's statement said.
On April 21, 2017, the food and consumer affairs ministry had issued guidelines which stated service charge is totally voluntary and not mandatory.
With PTI inputs
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