Did You Know You Can Refuse to Pay Service Charge Added on Your Restaurant Bill?

How many times have you had to look again at your restaurant bill to understand and reconcile how much was the amount charged for food, and how much was all the various charges and taxes levied? With the implementation of the GST, apparently some of our woes may have ended, but the service charge, which is being levied by restaurants at their discretion, is still on a sticky wicket.

Ashish has invited a group of friends out to celebrate his promotion. The restaurant he chose has rave reviews. Once seated and they order their first course they start noticing several lapses in the service. Cold soup is served; water glasses are not filled despite asking several times. The main course is brought out in instalments and the dessert is completely forgotten.

When the bill is presented to Ashish, the restaurant has levied a fat service charge, which irks him and he ask for the same to be deducted from the bill. A verbal spat ensues and he leave the restaurant feeling disgruntled by the entire dining experience.

This may very well have happened to you or someone you have dined with. Taking into cognisance various such concerns raised by consumers in January 2017, Food and Consumer Affairs Minister Ram Vilas Paswan in a tweet about the government-approved guidelines on service charge tweeted, “Service charge on hotel and restaurant bill is “’totally voluntary’ and not mandatory.”

Subsequently in July 2017, the department of consumer affairs said that it is illegal for restaurants and eateries to unilaterally levy a service charge. The department also urged diners to approach the consumer forum in case restaurants were levying service charge. While this is the legal reality, it is pertinent to understand how many diners would actually know about the consumer forum and how it works.

Shedding some light on the matter, Mr Prakul Kumar, Secretary General, National Restaurant Association of India (NRAI), said, “The present statements by the government are causing unnecessary confusion in public, which is adversely affecting the smooth functioning of restaurants. It is once again reiterated that as of now levy of service charge by restaurants is legal and does not violate provisions of the law. Guidelines are not laws.”

Vijay Gopal, an irate customer from Hyderabad, filed a complaint with the consumer forum resulting in a first-of-its kind action when the forum came down heavily upon a restaurant in the city for levying service charge on a diner. Vijay Gopal, the petitioner, had visited the restaurant and was charged Rs. 213 as service charge.

Arming himself with the government notification and information collected under the Right to Information he proceeded to file a consumer complaint.

The forum directed the restaurant to not mention, add or collect service charge from customers in the future and leave the option – of paying or not paying – open. As reported in The Times of India, “The restaurant has no legal right to mention service charge at 10% of the bill. It is the discretion of the customer to pay the amount if he likes the services.” The forum also directed the restaurant to refund the service charge and pay an additional Rs. 5,000 to the petitioner towards the costs he incurred in filing the case.

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In the United States of America while there is no concept of levying service charge, it is expected of the diners to leave a substantial tip when they pay the bill. In France for example, a service charge equals what your tip should be is already included in the bill. In China and Japan, tipping can be construed as being offensive and rude. Many restaurants in China and Japan refuse to accept tips. In countries like Cambodia and Thailand each diner, immaterial of the value of the meal, pays a dollar as a tip voluntarily.

Neha Seth, a former Oberoi group employee, said, “As an organisation the Oberoi group did not believe in tipping. A box is placed at the reception counter and guests who found the service of good standard could leave their gratuity in that. This would then get divided equally among the service staff.” Having said this, she also went on to say, “Personally I prefer restaurants levying a service charge since it makes my life easier. I walk out of the restaurant knowing that I have left a tip for the service I was provided. In cases where the service has been bad I have chosen not to pay the service charge as well.”

Vir Sanghvi, in an article in the Hindustan Times said, “A service charge relieves you of the obligation of calculating the exact percentage of the bill that you need to leave as a tip. Normally, servers do not expect you to leave anything extra for them once you have paid a service charge.”

While some consumers are breathing easy now that the government has said that service charge cannot be mandatory, others are left wondering what an appropriate amount to leave as tip would be. Like most government policies, this one too has stirred the hornet’s nest.

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