MC Interview| Consumer Affairs Secy.: "Service charge is clearly misleading and an unfair trade practice."

MC Interview| Consumer Affairs Secy.: "Service charge is clearly misleading and an unfair trade practice."

He said that rather than deceiving customers by imposing an ostensibly government-imposed tax, restaurateurs would be better served raising the cost of their services in order to fund increased pay for their employees.

Singh contends that restaurant owners can always raise the prices on the menu if they want to pay their employees more.

Restaurant service fees are "blatantly misleading" and constitute "unfair trade practices," Consumer Affairs Secretary Rohit Kumar Singh said in a special interview with Moneycontrol.

"The whole foundation of consumer protection is the idea that unethical business activities must be eliminated or curtailed. This is an obvious instance of unfair trade practices as you're asking the customer to pay Y while wearing X, which is unacceptable, the speaker said.

The Central Consumer Protection Authority (CCPA) released instructions in July of last year, stating that hotels and restaurants may not levy service charges on the bill automatically or collect them from customers under any other name. The recommendations were contested shortly after by the National Restaurant Association of India (NRAI), as well as the case has been pending in court ever since. The Department of Consumer Affairs and the private business group have both made strong arguments in support of their positions.

In the most recent hearing, which took place on October 3, attorney Lalit Bhasin, speaking on behalf of the NRAI, contended that since service charges are an agreement between restaurant management and employees, they fall under the purview of labor laws and the Department of Consumer Affairs is not authorized to issue a directive that forbids them.

But according to the secretary of consumer affairs, there is absolutely no labor concern here. "Who is covering the cost? the client. Therefore, he emphasized, "if a customer has paid for anything, whether it be an item or a service, it's a consumer protection concern under the Consumer Protection Act.

According to Singh, the consumer affairs ministry receives 1.2 lakh complaints on average each month, a significant portion of which are related to problems with service fees. And that's just the tip of the iceberg considering how few individuals voice grievances. Thus, we are unable to abandon it. Someone has to keep an eye on it and make the service providers address the complaints of the customers. That's what we do. That's what we're compensated for.

"We contend that by labeling it as a service charge and including it on the invoice, it appears to be a tax levied by the government." It is completely illogical to argue that the waiter is receiving this amount. That cannot be verified," Singh said.

Singh contends that restaurant owners can always raise the prices on the menu if they want to pay their employees more. We have no say over the menu pricing. Make it Rs 550 if you're eating butter chicken for Rs 500 and you want to tip your waiters extra. But don't mislead the customers," he said.

"Now, when you go to a restaurant with friends or other people, you don't want to quarrel in front of them. However, occasionally, even if people don't want to pay, they have to. And we oppose it," he said.

It is anticipated that the case will still be heard in court on November 8 and 9.