Introduction: Service charges on restaurant and hotel bills have been a contentious issue in India, with many establishments imposing charges after GST, leading to customer dissatisfaction. This article delves into the controversy surrounding service charges, clarifying customer rights and recent legal developments.
In India, many Restaurants and Hotels are misguiding their customers regarding service charges on total bill. Usually, Restaurants and Hotels are imposing charges after GST which is not acceptable. No one can pressurize the customer to pay the service charges. Recently, there was a case which was highlighted because customer was pressurized to pay service charges in Noida based Eatery. Then, it took the form of a big fight.
Many of the customers are not aware that they are not bound to pay the Service Charge added by the Restaurants and Hotels. This charge is completely optional. According to customer rights, the customer can complain if they are not willing to pay.
What Is the Service Charge?
A service charge is the amount which is added in the final bill of Restaurants and Hotels against the service given by them. It is not mandatory to pay because it is calculated after GST. Though most of the Restaurants and Hotels make their menu including GST. Many customers Question why they pay service charge after 18% GST. Some of the customers think that this amount is received by the government. But this is not the truth. This amount is accepted by the biller only because this charge is imposed by Restaurants and Hotels for the work of the person who serves you. The service charge which is added to the bill is 10%.
After that, CCPA has stated in the statement which was issued on July 4,2022 that service charge shall not be collected from customers. It is completely optional. No one can pressurize the customer.
On the other hand, on April 12,2023, the Delhi High Court passed an order to the Federation of Hotel and Restaurant (FHRAI) that use term Staff Contribution in place of Service Charge and this shall not exceed 10% and one more thing that Restaurant shall specify on their Menu card that no tip is to be paid after Staff Contribution Charge. Justice Pratibha M Singh has taken this decision while hearing two pleas by NRAI and CCPA.
Conclusion: Recent legal rulings have clarified that service charges on restaurant bills are optional, and customers cannot be compelled to pay them. The Delhi High Court’s directive to use “Staff Contribution” instead of service charges aims to bring transparency. Customers should be informed about their rights and understand how to address these charges effectively.
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Submitted by: MEGHA GUPTA | AIR 25 (CS FOUNDATION)
Disclaimer: The views and opinion in this article are for information purposes only. This article does not reflect officially. Readers are encouraged to do further research before taking any decision.
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