NRAI says service charge levy by restaurants matter of individual policy

The National Restaurant Association of India (NRAI) on Thursday told the government that levy of service charge by a restaurant is a matter of individual policy and there is no illegality in levying it.

In its meeting with the Department of Consumer Affairs, NRAI officials reiterated, as stated earlier in 2017, that levy of service charge is neither illegal, nor an unfair trade practice as alleged.

This matter had also come up in 2016-17, and the NRAI had provided its response to the government. On Thursday, the body reiterated the points as were put up earlier in 2017. This issue had also been satisfactorily explained to the Competition Commission of India on a query raised by them in January 2015.

The NRAI stated that the information regarding the amount of service charge is clearly mentioned/displayed by restaurants on their menu cards and otherwise also displayed on the premises, so that customers are well aware of this charge before availing the services.

After a customer is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice, it said.

Levy of service charge is beneficial for the workmen as a class who are employed in the establishments. Any move to the contrary would be detrimental to the interests of workers – and against the labour-friendly stance of the Government, the NRAI officials said.

“We thank the Department of Consumer Affairs for calling this meeting today. On behalf of the entire restaurant industry, we have firmly reiterated all facts with proof to the Department that Levy of Service Charge is neither illegal, nor an unfair trade practice as alleged, and this debate in public domain is creating unnecessary confusion and disruption in smooth operations of restaurants,” said NRAI President, in a statement.

“The service charge is transparent, worker friendly and is also recognised by many judicial orders which have been shared with the Department. In addition, the government also earns revenue from the service charge as tax is paid by restaurants on the same,” the statement added.




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