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NEW DELHI: Having consumed the meal served at a restaurant, a customer cannot ask for service charges to be dropped, the National Restaurant Association of India has said.
It also said that information about service charges is mentioned and (or) displayed by restaurants on their menu cards and also displayed on the premises of a restaurant and that there is nothing illegal about it.
In a meeting with the Department of Consumer Affairs, the Association said levying of service charge by restaurants is a matter of individual policy and customers are aware of this charge before availing the services at restaurants. This matter, it said, had also come up in 2016-17, and it had provided its response to the government on the issue even then.
Last month, the consumer affairs, food, and public distribution ministry had, in a statement, said that consumers were being misled about the legality of the service charge and also were being harassed when they requested the removal of it from bills. The DoCA had said several grievances were being registered by consumers on the National Consumer Helpline on this issue.
The National Restaurant Association said that once a customer places an order, a contract comes into existence and there is an offer by the restaurant to provide the food on the menu and it is up to the customer to accept the offer of the restaurant or not while placing their order in the restaurant. It is then that the customer has to exercise the option on whether or not to accept the offer of the price of the product plus service charge.
“Levying service charge is beneficial for the workmen as a class who are employed in the establishments. Any move to the contrary would be detrimental to the interests of workers – and against the labour-friendly stance of the government. It also brings in revenue to the government, since tax is paid on the same," it said.
The association’s spokesperson said, “We have firmly reiterated all facts with proof that the levy of service charge is neither illegal, nor an unfair trade practice as alleged, and this debate in public domain is creating unnecessary confusion and disruption in smooth operations of restaurants. The service charge is transparent, worker friendly and is also recognised by many judicial orders which have been shared with the department. In addition, the government also earns revenue from the service charge as tax is paid by restaurants on the same."
Ajit Shah, co-founder at White Panda Hospitality, which has three restaurants in Delhi, including Kiko Ba and Tera Vita, said, this kind of money, always goes for the welfare of the staff and is distributed as a percentage to the staff working in the restaurant, both in the front of house and back. “Service charge was introduced in the system to replace the unstable system of tipping," he said.
He said as far the law is concerned, the charge is discretionary and the contract comes in even after the food has been consumed. “Consumers cannot know they would be dissatisfied with the experience before they eat the food and should be able to decide even after the meal is done, but in our restaurants, the servers and managers on the floor are trained to ask the customers a couple of times if the food served is good and if they are comfortable with the experience just to make sure that they go back happy. So in a scenario like this where when customer was happy and yet asks to remove the service charge from the bill only implies that the customer is cutting costs a bit," he said.
One customer who did not want to be named said as a customer, they don’t always feel comfortable paying the “discretionary" charge even when the service is good. “It is my money and the fact that it is discretionary means I should be able to decide when I want to pay it," they said.
The association said it represents the interests of over 5 lakh restaurants and as an industry it is valued at ₹4,23,865 crore.