What happened to the issue of ‘Service Charge’ collection by Restaurants?

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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 effect.  

Levy of ‘Service Charge’ by various Hotels & Restaurants hit 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 is having little effect on the ground if one goes by the answers given to some parliament questions.

Government received complaints of ‘Service Charge’ after the 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 onto say that the complainants were guided to approach the relevant consumer forum for redressal of disputes.

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The advisory won’t work in its 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 they are 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. In response to another question in the Lok Sabha, the government mentioned 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). 60% of these 163 complaints were received from Delhi, Maharashtra & Karnataka.

Government held a meeting with the Hotel Association, but no resolution so far

The government mentioned in the Lok Sabha that a meeting was held with the 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 association is yet to get back to the government with a proposal.

What about the dual MRP issue?

Another issue that hit the headlines concerning the average consumer is the dual MRP of water bottles. It was reported by various media houses that the minister concerned has asked the mineral water companies to respond to the issue dual MRP and that he tweeted about bottled water being 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 on the issue of dual MRP, it said that the central government cannot do anything in this regard since the competent authority is the state government. It went onto say that an advisory has been issued by the Central Government much like in the case of ‘Service Charge’.

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