Hotels cannot collect service fees from guests: Center

The Central Consumer Protection Authority (CCPA) issued guidelines on Monday preventing hotels and restaurants from levying service charges on customers. Hotels or restaurants should not add a service charge automatically or by default to the food bill, per the guidelines.

The guidelines, issued by Nidhi Khare, Chief Commissioner, CCPA, adds that if a consumer finds that a hotel or restaurant is violating the guidelines, they can request the removal of the service charge from the bill amount or file a complaint on the National Consumer Helpline (NCH). Complaints can also be filed with the Consumer Affairs Commission or the District Collector.

“No hotel or restaurant should force a consumer to pay a service charge and should clearly inform the consumer that the service charge is voluntary, optional and at the discretion of the consumer. No restrictions on entry or provision of services based on charging service fees will be imposed on consumers. The service charge will not be collected by adding it to the food bill and levying GST on the total amount,” the Department of Consumer Affairs said in an official statement.

Inherent in price

The department said the National Consumer Helpline (NCH) had received a number of complaints from consumers against the collection of service charges. The guidelines added that the service component is inherent in the price of food and beverages offered by the restaurant or hotel. “Product pricing therefore covers both the goods and services component. There are no restrictions placed on hotels or restaurants to set the prices at which they wish to offer food or drink to consumers. Thus, the fact of placing an order implies the consent to pay the prices of the food products displayed on the menu as well as the applicable taxes. To charge anything other than said amount would amount to an unfair commercial practice under the law,” the guidelines added.

“No hotel or restaurant should add a service charge automatically or by default to the bill. Service charges should not be collected from consumers under any other name,” the guidelines state.