NEW DELHI: Defending the restaurants’ right to levy service charges as legal and optional, the Federation of Hotels and Restaurant Association of India said on Friday it will participate in the discussions on the subject called by the Department of Consumer Affairs (DoCA) on June 2.
The DoCA discussion follows complaints by customers on the National Consumer Helpline that restaurants impose a compulsory levy of 5-15% even though service charges are different from tax and are in the nature of a tip collected by the restaurant.
In response to complaints, Union secretary consumer affairs, food and public distribution, Rohit Kumar Singh, had written to restaurant associations and said default billing option is not mandated by law.
Reacting to the charge, FHRAI said on Friday that the service charge is “part of the invitation offered by the restaurant to the potential customers. It is for the customers to decide whether they wish to patronise the said restaurant or not.”
“Service charge is considered a beneficial payment since it is meant for the benefit of the staff of the establishment … It is entirely a restaurant’s discretion whether to charge service fee or not. If a guest has any objection to paying service charge, it can be removed from the bill,” said Gurbaxish Singh Kohli, Vice President, FHRAI.
FHRAI also said service charge, colloquially known as ‘tip’, is prominently mentioned on restaurant menus and customers are aware of the charges being levied.
A recent TOI poll, however, showed that many customers didn't know that paying service charge is voluntary. A majority of customers were also never told by the restaurant that paying the fee was optional.
