Guwahati: The Department of Consumer Affairs (DoCA) will shortly release a strong framework to enforce rigorous compliance by stakeholders with regard to service charges charged by restaurants and hotels, which have a negative impact on consumers on a daily basis.

Today, the Department met with restaurant groups and consumer organisations to discuss the imposition of a service fee in hotels and restaurants. Rohit Kumar Singh, Secretary, DoCA, presided over the meeting.

Major restaurant organisations such as the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) as well as consumer organisations such as Mumbai Grahak Panchayat, Pushpa Girimaji, and others attended the conference.

Major issues raised by consumers on the DoCA's National Consumer Helpline relating to service charges, such as compulsory levy of service charge, adding the charge by default without express consent of consumer, suppressing that such charge is optional and voluntary, and embarrassing consumers if they refuse to pay such charge, were discussed during the meeting. Furthermore, rules on fair trade practises relating to charging of service fee by hotels/restaurants released by DoCA on April 21, 2017 were referred to.

According to the restaurant associations, when a service fee is included on the menu, the consumer implicitly agrees to pay the price. The service charge is used by restaurants and hotels to compensate their employees and is not paid for the experience or food supplied to customers.

According to consumer organisations, levying a service charge is obviously arbitrary and constitutes an unfair and discriminatory trading conduct under the Consumer Protection Act. In questioning the constitutionality of such a fee, it was said that while there is no prohibition on restaurants/hotels from setting their meal pricing, introducing an additional tax in the name of a service charge is damaging to consumer rights.

According to the prior rules provided by DoCA on April 21, 2017, placing an order by a client constitutes his commitment to pay the prices on the menu plus relevant taxes. Charging for anything other than the aforementioned without the consumer's express agreement would be considered unfair commercial conduct under the Act. Furthermore, treating a customer's admittance into a restaurant/hotel as implicit permission to pay a service charge would amount to the imposition of an unreasonable expense on the consumer as a condition previous to making an order for meals and would constitute restrictive trade conduct under the Act.

Since this adversely affects millions of consumers on a daily basis, the Department will soon come up with a robust framework to ensure strict compliance by the stakeholders.