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Government Bans Recovery of Service Charge by the Restaurants

New Delhi: On Monday Consumer Affairs Ministry said that in hotels and restaurants, customers across the country are forced to pay the service charge. Ministry, citing Consumer Protection Act, said that paying  the service charge to the restaurant is completely optional and it can be recovered without the customer’s consent.


Complaints of Forced Service Charge

In the last several months there were reports of several complaints of forced service charge by the customers in the Ministry. The complaints were that in the name of tips as huge as 5-20 service charge were recovered from the customers by several hotels and restaurants across the country. And that much amount, the customers had to pay for availing any kind of service.

What does The Consumer Protection Act, 1986 Say?

According to the Consumer Protection Act 1986, if any trader or businessperson, in order to increase the sale of their products, gets engaged in some unethical practices, then it will be deemed to be unfair trade practice. If any trader is found to be involved in such practice/s, stern action will be taken against the errant person. The act also enables an aggrieved person to lodge complaint against such person in Consumer Affairs Department.

A Bold Move of Consumer Affairs Ministry

It is important to mention here that after receiving umpteen complaints of the consumers, the Consumer Affairs Ministry has sought clarification from the Hotel Association of India. In a written reply, the Association has made it clear that to pay the service charge or not, solely depends on the will of the customers and those customers who are not completely satisfied with the services of a hotel or restaurant, they are well within their rights to ask for the deduction of the service charge.

Central Government Appeals to the State Governments


After the central Government made it clear that it is not binding on the customers to pay the service tax, it has appealed to the state Governments to make the laws related to service charge more comprehensive so that more and more people can come to know about its provisions.

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