Can contest service charge, say lawyers
Premium- Restaurants and hotels cannot levy service charges without consent of customers, Union minister Piyush Goyal said
Customers can contest the service charge levied by eateries at any time during the meal, legal experts said. This comes against the backdrop of restaurant associations being at loggerheads with the consumer affairs ministry about this over the past few days.
A service charge is like a “hybrid tip", which was not a standard in the Indian food and beverage industry earlier and came into practice recently, said Sameer Jain, managing partner, PSL, Advocates & Solicitors. “Restaurants are anyway charging 4x or 10x of the food and alcohol charges. It is not necessarily correct that a service charge over and above this is the right of a restaurant. In fact, a customer can contest it any time during the meal and not just prior to it," Jain said. Many customers were under the impression earlier that it was a part of service tax, he said.
There are existing taxes that are service compliant and hence a balance must be struck in levying the service charge, said Safir Anand, senior partner at Anand & Anand. “A service charge is a reflection of service offered by a restaurant and its personnel and hence, there should be some leeway for a waiver in the case where service standards may not be optimum. The bottom line on one side is that it is a contract and the other that it is optional. Hence, the government plans to issue an order," he said.
Restaurants and hotels can raise prices but cannot levy service charges without the customer’s explicit consent, Union commerce minister Piyush Goyal said on Friday. If restaurant owners want to pay high salaries to employees, they can raise rates on their menu as there is no price control. “Restaurants can charge whatever they want, there’s no price control from the government’s side," the minister said.
varuni.k@livemint.com