Lok Sabha Question No. 4365 (UNSTARRED), answered on 2017-03-28
Subject: Service Charge at Hotels
Ministry: CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
Asked by: ANANDRAO  ADSUL, VINAYAK BHAURAO RAUT, PINAKI MISRA, Shrirang Appa Barne, RAHUL RAMESH SHEWALE, SHRIKANT EKNATH SHINDE, RAKSHA NIKHIL KHADSE

## Government of India

## Ministry of Consumer Affairs, Food and Public Distribution

## Department of Consumer Affairs

## LOK SABHA UNSTARRED QUESTION NO. 4365

TO BE ANSWERED ON 28.03.2017

## SERVICE CHARGE AT HOTELS

4365.   SHRI  ANANDRAO  ADSUL:  SHRI  VINAYAK  BHAURAO  RAUT:  SHRI  PINAKI MISRA: SHRI SHRIRANG APPA BARNE: SHRI RAHUL SHEWALE: DR. SHRIKANT EKNATH SHINDE: SHRIMATI RAKSHATAI KHADSE:

## 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 Union Government has requested State Governments to sensitize companies, hotels  and  restaurants  regarding  provisions  of  the  Consumer  Protection  Act,  if  so,  the details thereof;
- (b) whether  the  Union  Government  has  also  advised  State  Governments  to  put  up  notice making service charge optional, if so, the details thereof;
- (c) whether  the  hotels  and  restaurants  inflate  bills  in  the  name  of  service  charge  which  is absolutely illegal and if so, the reasons of the Union Government thereto;
- (d) whether there is a need to bring a strict law to ban service charge instead of the notification making it optional for the consumer, if so, the response of the Union Government thereto and  the  corrective  steps  taken  or  proposed  by  the  Union  Government  in  this  regard including the immediate steps taken by the Union Government to do away with the service charge; and
- (e) whether Government proposes to make provision in New Consumer Protection Bill to set up  a  regulator  CCPA  (Consumer  Credit  Protection  Act)  for  the  unfair  trade  practice followed to  collect  the  service  charges  on  food  and  drink  at  hotels  and  if  so,  the  details thereof?

## 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)  to (c) : It has come to the notice of the department of Consumer Affairs through a number of  complaints  from  consumers  received  in  the  National  Consumer  Helpline  that  hotels  and restaurants are following the practice of charging 'service charge' in the range of 5-20% , in lieu of tips.  The  Department  has  advised  the  State  Governments  to  sensitize  the  companies,  hotels  and restaurants in the state regarding the provisions of the Consumer Protection Act, 1986 relating to unfair  trade  practice  and  legal  action  against  such  practice  and  to  disseminate  the  information through  display  at  the  appropriate  place  in  the  hotels/restaurants  that  the  'service  charges'  are discretionary/voluntarily and a consumer dissatisfied with the services can have it waived off.

(d) : The Consumer Protection Act, 1986 already 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.

Forceful charging of the service charges, being an unfair trade practice, can be complained against  in  a  Consumer  Forum  of  appropriate  jurisdiction  for  redressal,  as  per  provisions  of  the Consumer Protection Act, 1986.

(e) : The  Government  has  already  introduced  the  Consumer  Protection  Bill,  2015  in Parliament.  The  Bill  seeks  to  establish  an  executive  agency  to  be  called  the  Central  Consumer Protection Authority, which will look into matters of unfair trade practices.

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