What Govt Advisory? Restaurants Still Levying Service Charge

The issue of service charge in restaurants hit the headlines a few months back after an advisory by the government. But the advisory seems to have had little impact on the ground.

Levying of service charge by various hotels and restaurants made the headlines a few months ago when the government issued a press note clarifying its stand on the issue. Factly had said at that time that voluntary ‘service charge’ won’t work unless there is clarity in the law. It seems that the government’s advisory has had little impact on the ground if one goes by the answers given to some questions in Parliament.

Complaints Received After Government Advisory

In response to a question in the Lok Sabha, the government said that it issued an advisory in December 2016 to the state governments on this issue. It said that the state governments were requested to disseminate this information.

The government acknowledged that even after the issuance of the advisory, complaints have been received on the National Consumer Helpline. The government went on to say that the complainants were guided to approach the relevant consumer forum for redressal of disputes.

Why Advisory Won't Work in It’s Current Form

As Factly said earlier, the advisory in its current form will not work for the simple reason that the advisory leaves scope for a lot of discretion. No consumer would want to pay the ‘voluntary’ service charge and no restaurant would want to lose out on the ‘service charge’. This will only lead to disputes. The government admitted in the Lok Sabha that it is directing the complainants to the relevant consumer fora.

How many consumers would take the pains of approaching a consumer forum is anybody’s guess. In fact, the presence of a national consumer helpline itself is largely unknown to people.

Also Read: Restaurant Service Charge Is Now Optional... But Is It Really?

In response to another question in the Lok Sabha, the government said that only 28 complaints were received about service charge from across the country in 2015-16. In 2016-17, the number of complaints increased to 163 (till February 2017). Of these, 60% were received from Delhi, Maharashtra & Karnataka.

Govt Holds Meeting with the Hotel Association

The government mentioned in the Lok Sabha that a meeting was held with a hotel and restaurant associations in January 2017 to discuss the issue and that they were asked to come up with a proposal to resolve the issue. The associations are yet to get back to the government with a proposal.

What About the Dual MRP Issue?

Another issue that made the headlines concerning the average consumer is the dual MRPs of water bottles. It was reported by various media houses that the minister concerned has asked bottled water companies to respond to the issue of dual MRP. The minister also tweeted that bottled water would be available at the same MRP at all places.

But the government’s response to a question in the Lok Sabha tells a different story. When it was asked if the government has initiated any action over the issue, it said that the central government cannot do anything in this regard since the competent authority is the state government.

Also Read: Consumer Can Refuse to Pay: Govt Explains Stand on Service Charge

It went on to say that an advisory has been issued by the central government, much like in the case of service charge. This advisory also in all probability will end up like the advisory on service charge since the law itself is unclear.

(This article has been published in an arrangement with Factly)