Air-conditioned restaurants across India continue to levy forced service charge on consumers, indicating non-compliance to government guidelines, survey by LocalCircles has found. Around 43% consumers surveyed paid service charge at AC restaurants in the last three months, while 9% got it removed, the survey results showed.
The automatic levy of service charge has been a contentious issue for long with the Delhi High Court’s stay on the ban issued by Central Consumer Protection Authority (CCPA) leading to confusion in the interim. An argument between diners and staff over the issue had even snowballed into an all-out brawl in a Noida restaurant last month.
The CCPA had in July 2022 issued guidelines for a ban on service charge, but the same was challenged in the court by National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations.
The Delhi HC on April 12 this year stayed the ban, but made it clear that the stay order cannot be shown by restaurants to the customers in a manner which suggests that the charge has been approved by it.
The stay is subject to the petitioners ensuring that the levy, in addition to the price and taxes, and the obligation of the customer to pay the same is duly and prominently displayed on the menu or other places, the court had said.
According to the LocalCircles report, in the interim, consumers flocking to air-conditioned eateries in increasing numbers are having to pay high service charges even if they are not satisfied with the services.
The survey received over 11,000 responses from citizens located in 303 districts of India.
“Out of 11,066 surveyed, 43% stated that the ‘the restaurant charged and we paid’, while only 9% shared that they asserted their right and ‘got them to remove’ the service charges. It appears that not all air-conditioned restaurants are automatically levying service charges going by the response of 30% of those surveyed while 18% stated that they had no knowledge of the issue as they ‘did not pay attention or someone else paid’ the bill,” the survey report said.
“A comparative study of the surveys conducted in September 2022 and now in July 2023 when the restaurant industry is back in full swing shows that consumers are still being levied service charge in a forceful manner rather than in a voluntary or optional manner as per the guidelines,” it added.
The report advocated that service charge should be an optional levy left to the discretion of the consumers based on their experience.
“Most restaurant associations maintain the position that service charge helps employees and even the consumers as the gratuity becomes transparent. However, most consumers have been opposing the idea that restaurants are levying service charges forcefully or by default in the bills, particularly where the service experience has not been good and it should instead be a suggestive charge with an option for the consumer to provide consent, fill or check the box.”
Around 66% respondents were men, while 34% respondents were women. While 47% respondents were from tier 1, 36% were from tier 2 and 17% respondents were from tier 3, 4 and rural districts, the report stated.
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