Lok Sabha Question No. 156 (STARRED), answered on 2022-07-27
Subject: Levy of Service Charges
Ministry: CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION
Asked by: L.S. Tejasvi Surya, Bheemrao Baswanthrao Patil

## Government of India

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

## LOK  SABHA

STARRED QUESTION NO. *156

TO BE ANSWERED ON 27.07.2022

## LEVY OF SERVICE CHARGES

*156. SHRI L.S. TEJASVI SURYA: SHRI B.B.PATIL:

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 it is true that restaurants, hotels, shops and establishments cannot levy service charge in addition  to  GST  on  a  customer  and  if  so,  the  details  of  the  rule/  regulation  laid  down  in  this regard;

- (b) the grievance redressal mechanism available for a customer to report the above along with the details of the appellate authority who considers these cases;

- (c) whether the Government helpline for consumers has received complaints against restaurants and other  such  chains  levying  service  charge  and  denying  entry  to  a  customer  for  refusing  to  pay service charge;

- (d) if  so,  the  number  of  such  complaints  received, resolved or under investigation, etc.,  year-wise and category-wise; and

- (e) the measures taken/likely to be taken by the Government to provide concrete legal backing to deal with this issue?

## ANSWER

## miHkksDrk ekeys] [kk| vkSj lkoZtfud forj.k ea=h ¼Jh ih;w"k xks;y½

THE MINISTER OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION (SHRI PIYUSH GOYAL)

(a) to (e)  :   A Statement is laid on the Table of the House.

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## STATEMENT REFERRED IN REPLY TO PARTS (a) TO (e) OF  LOK  SABHA  STARRED QUESTION NO.*156 FOR 27.07.2022 REGARDING LEVY OF SERVICE CHARGES.

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(a)  to  (e):  Section  18(2)(l)  of  the  Consumer  Protection  Act,  2019  empowers  Central  Consumer Protection  Authority  to  issue  necessary  guidelines  to  prevent  unfair  trade  practices  and  protect consumers' interest.

A number of complaints were being received on National Consumer Helpline regarding addition of service  charge  by  restaurants  and  hotels  in  the  bill  without  consent  of  consumers.  A  component  of service  is  inherent  in  price  of  food  and  beverages  offered  by  the  restaurant  or  hotel.  Pricing  of  the product  thus  covers  both  the  goods  and  services  component.  There  is  no  restriction  on  hotels  or restaurants to set the prices at which they want to offer food or beverages to consumers.

The Central Consumer Protection Authority, taking cognizance of such complaints being received on National Consumer Helpline regarding levy of service charge by hotels and restaurants, has issued guidelines to prevent unfair trade practices and protection of consumer interest with regard to levy of service charge in hotels and restaurants on 4th July, 2022. The guidelines issued by CCPA stipulate that hotels and restaurants shall not add service charge automatically or by default in the food bill and have to clearly inform the consumer that service charge is voluntary, optional and at consumer's discretion. These guidelines do not prohibit a consumer to pay tips to serving staff voluntarily.

High Court of Delhi has, vide its order dated 20.07.2022, stayed para 7 of these guidelines with further directions that the proposed levy of a service charge in addition to the price and taxes payable and the obligation of customers to pay the same shall be duly and prominently displayed on the menu or other places where it may deemed to be expedient and no service charge be levied on any take away items.

Under the ibid Act, a three tier quasi-judicial mechanism, namely the National Consumer Disputes Redressal  Commission,  State  Consumer  Disputes  Redressal  Commissions  and  District  Consumer Disputes Redressal Commissions have been set up in the country to provide simple, inexpensive and speedy redressal to the consumer disputes including those related with levy of service charge.

At pre-litigation stage, a consumer can lodge a complaint in National Consumer Helpline. During 2019-20, 658 complaints were filed regarding levy of service charge in National Consumer Helpline. For  the  year  2020-21  and  2021-22,  99  and  413  such  complaints  were  filed  respectively.  All  the complaints have been disposed of with either resolution provided by the concerned hotel or restaurant or with the advice to the consumer to approach consumer commission. Details of these grievances received on National Consumer Helpline during last three years are available at URLhttps://consumeraffairs.nic.in/NCH\_Grievances\_on\_Service\_Charge.xlsx .

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