A legal framework can Introduce by Govt to stop levying service charges by restaurants

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The government is planning to come out with a legal framework that will stop restaurants from taking levying service charges on customers. As per the report, it is unfair practice said by Rohit Kumar consumer Affair Secretary. 

After conducting a meeting with associations representatives of restaurants as well as consumers. According to Mr. Singh associations claims that this practice is legal, but according to the department of consumer affairs, it is adversely affecting the rights of consumers and is an Unfair trade of practice. 

Mr. Singh also told that this legal framework is going to work soon, and the guidelines in the year 2017 state the same. He also told that the guideline of 2017 was not enforced till then. The meeting was attended by National Restaurant Association Of India representatives along with the Federation of Hotel & Restaurant Associations of India and Consumers. In this meeting Mumbai Grahak Panchayat and Pushpa Girimaji was also present.

This legal framework will be going to bind legally for stopping the service charge practice. Many times it is noted that consumers get confused between service charge and service tax and they just pay both.

During this meeting, both the representatives of NPAI and FHRAI told that they levying the service charge which was not illegal. In an official release it said that during the meeting, major issues were raised by consumers on the national consumer helpline of the department that was discussed. The issue was related to compulsory levy of service charges, adding the charges by default without expressing the consent of consumers, and suppressing such charges is optional and voluntary. If that charge was not paid by consumers, then they have to face an embarrassing situation. 

Consumer organizations found that levying service charges are patently arbitrary and constitute. It is an unfair as well as restrictive trade of practice under the consumer protection Act. 

Questioning the legitimacy of these types of charges, It has been highlighted that since there is no such bar on hotels and restaurants on fixing the food prices. It also includes additional charges in the name of services charges to detrimental the rights of consumers.

NRAI also stated that said matter has previously come on in the year 2016 and 2017 that are associated and has provided its response to the government. They also reiterated the point that was put up earlier in the year 2017. 

The service charge issue has a satisfactory explanation by NRAI to the Competition Commission of India on the query raised in January 2015. President of NRAI Mr. Kabir Suri has said that levying services charges is neither illegal nor not unfair trade of practice as alleged. This debate is in the public domain that creating unnecessary confusion and disruption in running operations of restaurants smoothly. 

Mr. Kabir Suri also said that service charges are transparent and worker-friendly. It is also recognized by many judicial orders which already shared by the department. The government also earns revenue from these services charges as tax which is paid by restaurants on the same.

During this meeting, FHRAI stated that it clearly clarifies that restaurant collecting service charges is neither illegal nor it not violating any law. Association also explained that service charges are like any other charges that are collected by the establishment. It is part of the invitation offered by the restaurant to potential customers. It totally depends on the customer to decide whether they wish to patronize the restaurants or not. This is said by FHRAI in a separate statement

A service charge is only meant for the benefit of staff and so establishments can make the conscious choice to adopt the policy that is beneficial to its staff members. Service charges are general practices adopted across the world. It is neither illegal nor not violates any such law. Each restaurant is free to create its own policy regarding the service charges. Vice President of FHRAI Mr. Gurbaxish Singh Kohli said.

If concerns about transparency in adding the service charges to the bill, FHRAI has clarified that the charges will be disclosed to the customer in advance and the same will be clearly printed in a separate headline in the bill as service charges not as a tax. So that there is complete transparency with regards to the amount and the rate and purpose of the charges. 

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