Lok Sabha Question No. 803 (UNSTARRED), answered on 2017-02-07
Subject: Levy of Service Charge by Hotels
Ministry: CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
Asked by: JOSE K. MANI, Shrirang Appa Barne, SHIVAJI ADHALRAO PATIL, VINAYAK BHAURAO RAUT

## Government of India

## Ministry of Consumer Affairs, Food and Public Distribution Department of Consumer Affairs

## LOK SABHA UNSTARRED QUESTION NO. 803

TO BE ANSWERED ON 07.2.2017

## LEVY OF SERVICE CHARGE BY HOTELS

803. SHRI JOSE K. MANI: SHRI SHRIRANG APPA BARNE:

SHRI ADHALRAO PATIL SHIVAJIRAO: SHRI VINAYAK BHAURAO RAUT:

## Will the Minister of CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION miHkksDrk ekeys] [kk| vkSj lkoZtfud forj.k ea=h be pleased to state:

- (a) whether  the  Government  has  received  complaints  from  consumers  that  hotels  and restaurants are levying an additional 5 to 20 per cent in bills as service charge in lieu of tips,  regardless  of  the  kind  of  service  provided  and  if  so,  the  details  thereof  and  the reasons therefor along with the action taken thereon;
- (b) whether the Government has issued any advisory that levy of such service charges are not mandatory and amounts to unfair trade practices and if so, whether the Government has asked the hotels and restaurants to give a choice to consumers whether to pay the service charges or not;
- (c) whether  there  is  no  provision  under  the  existing  law  to  take  action  against  hotels/ restaurants  which  levy  service  charge  from  the  consumers  forcefully  and  if  so,  the details thereof; and
- (d) the  steps  taken  by  the  Government  to  make  amendments  in  the  law  to  take  action against the hotels/restaurants which levy service charge from the consumers?

## ANSWER

## miHkksDrk ekeys] [kk| vkSj lkoZtfud forj.k jkT; ea=h ¼Jh lh- vkj- pkS/kjh½

## THE MINISTER OF STATE CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION (SHRI C. R. CHAUDHARY)

- (a) : Yes,  Madam.    The  Government  has  received  a  number  of  complaints  from consumers through  the  National  Consumer  Helpline    that  some  hotels  and  restaurants  have been levying service charge at the rate of 5-20 per cent on the bills of food and beverages in lieu of tips which a consumer is forced to pay irrespective of the kind of service provided to him.
- (b) :   The Department of Consumer Affairs has examined the matter and  issued advisory to  the  State  Governments  to  sensitize  the  companies,  hotels  and  restaurants  in  the  states regarding the  provisions of the Consumer Protection Act, 1986 on unfair trade practices and also  to  advise  the  hotels/restaurants  to  disseminate  information  through  display  at  the appropriate  place  in the hotels/restaurants that the 'service charges"  are  discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off.

(c) & (d) : The Consumer Protection Act, 1986 provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service,  adopts  any  unfair  method  or  deceptive  practice,  is  to  be  treated  as  an  unfair  trade practice.  The  said  Act  further  provides  that  a  consumer  can  make  a  complaint  to  the appropriate consumer forum established under the Act against

- (i) an unfair trade practice adopted by any trader or service provider
- (ii)      the services hired or availed of, suffered from deficiency in any respect
- (iii) a trader or service provider, as the case may be, has charged for the goods or for the services a price in excess of the price (a) fixed by or under any law for the time being enforce, (b) displayed on the goods or any package containing such goods, (c) displayed on the price list exhibited by him or under any law for the time being in force or (d) agreed between the parties.

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