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Restaurant Includes Service Charges in the bill – What to do next?

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By uday

It is not uncommon to come across restaurants and hotels that continue to impose service charges even after including GST in the bill. Numerous incidents have been reported where customers have been pressured into paying an additional fee on top of the GST. However, many consumers are unaware that service charges are optional and they are only obligated to pay if they choose to do so. In fact, according to consumer rights, customers have the right to file a complaint against a restaurant that insists on charging service tax.

Service charges refer to the amount imposed by restaurants for the services they provide to their customers. This fee is collected directly by the restaurant. While most restaurants and hotels include these charges in their menu prices, customers are only required to pay the GST. Unfortunately, some consumers were unaware that they were no longer obligated to pay such charges after the introduction of GST.

To address this issue, the Central Consumer Protection Authority (CCPA) clarified that service charges are not imposed by the government and, on July 4, 2022, announced a complete ban on such charges. The CCPA also released guidelines outlining the policies for restaurants. According to these guidelines, hotels and restaurants are prohibited from charging customers any additional amounts. Customers are only expected to pay a tip if they are satisfied with the service, and they have the freedom to choose the amount.

If you find yourself in a situation where a restaurant includes service charges, remember that you have the right to refuse payment. The CCPA has taken steps to protect consumer rights and ensure that customers are not unfairly burdened with unnecessary charges.

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Restaurant Table” by Leeroy/ CC0 1.0

The guidelines state that hotels and restaurants are prohibited from charging any service fees. These charges cannot be collected under any other name. Furthermore, restaurants and hotels are not allowed to ban customers from entering their premises or pressure them into making payments. Additionally, after the implementation of GST, no additional charges can be added to the bill.

The CCPA has clarified that restaurants already include service charges in the prices of their food and beverages. The cost of goods and services is factored into the pricing, and there are no restrictions on the pricing of hotel and restaurant products. When a customer orders an item from the menu, they are agreeing to pay the amount listed on the menu plus taxes. Any charges beyond that would be considered an unfair trade practice.

In a verdict, the Delhi High Court lifted the ban on service charges imposed by the CCPA. However, the court also emphasized that no restaurant or hotel can compel customers to pay any charges. Charges cannot be imposed without the consent of the customers, and the authorities must be transparent about the applied charges on the bill. It has been observed that many restaurants are not transparent about these charges, and their staff often neglect to inform customers before billing. On April 12, 2023, the Delhi High Court made it clear that restaurants cannot impose charges based on the 2022 verdict, expressing their lack of support for such collections.

If you find yourself being charged by a hotel, follow these steps: Firstly, discuss the extra charges with the manager and request their removal. If they refuse to remove the charges and insist on payment, make sure to keep a copy of the bill. You can then file a complaint with the consumer forum.

To file a complaint, simply visit the official website of the consumer forum https://edaakhil.nic.in/edaakhil/ . Register your complaint, attach a copy of the bill, and the forum department will handle the rest of the process.

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