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NRAI says no illegality in levying service charge by restaurants

New Delhi, May 24, 2022- The National Restaurant Association of India (NRAI) on Tuesday defended service charge being levied by restaurants across the country, saying there is no illegality in levying such a charge.

Ahead of its June 2 meeting with the government to discuss the issues pertaining to service charges levied by restaurants, the top hotel industry body said that the levy of service charge is a matter of individual policy to decide if it is to be charged or not.

“Information regarding the amount of service charge is mentioned/displayed by restaurants on their menu cards and otherwise also displayed on the premises, so that customers are well aware of this charge before availing the services,” the NRAI said in a statement.

“Once the customer is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice. GST is also paid on the said charge to the government,” the industry body argued.

Earlier, taking notice of a number of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH), the Department of Consumer Affairs (DoCA) under the Ministry of Consumer Affairs, Food, and Public Distribution announced to convene the meeting.

The matter had come up in 2016-17, and NRAI had provided it’s response to the Government. There is nothing new which has been communicated by the Department in its letter for the meeting on June 2, 2022.

Restaurants making service charge compulsory, adding service charge in the bill in the guise of some other fee or charge, suppressing from consumers that paying service charge is optional and voluntary, and embarrassing consumers in case they resist from paying service charge would be among the issues to be discussed at the June 2 meeting.

In a letter written by Consumer Affairs Secretary Rohit Kumar Singh to the the NRAI President, it was pointed out that the restaurants and eateries are collecting service charge from consumers by default, even though collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law.

The NRAI said that the same matter had come up in 2016-17, and the industry body had provided it’s response to the government.

“There is nothing new which has been communicated by the Department in its letter for the meeting on June 2” added the NRAI, which represents more than 5 lakh restaurants, an industry valued at Rs 4,23,865 crore.  (Agency)

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