In what could be called a step to put an end to confusion, the government today announced that restaurants can't ask their customers to pay service charge anymore.
The move comes months after it said in January that customers could choose not to pay service charges as it was not a mandatory.
However, it had triggered turbulence with heated spats breaking out between patrons and employees at pubs and eateries. Many experts felt that the government should clear the confusion by doing away with the service charge in order to avoid conflicts between hoteliers and customers.
Earlier in January, the Department of Consumer Affairs had asked state governments to advise hotels or restaurants to display information on their premises that 'service charges' are discretionary.
It said: "A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him."
The Ministry had sought clarification from the Hotel Association of India, which replied that "service charge is completely discretionary and should a customer be dissatisfied with the dining experience, he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily."
Consumer Affairs Minister Ram Vilas Paswan had also expressed his displeasure over hotels' practice of charging 5-20 per cent service charge.
He said: "Our Department's view is that imposing service charge is an unfair trade practice and consumers need not pay. There is no definition of 'service charge' in law but taking service charge without discretion of consumers is an unfair trade practice."
Paswan also said that consumers should be informed about service charge in the menu card itself and not in the bill. He also argued that there is no need to take service charge from consumers as price of each food item d in the menu card is arrived at after factoring in all expenses.
In fact, hotels and restaurants should not charge even room service charge additionally, Paswan had said.