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Restaurants say service charge legal, up to customers to patronise or not: NRAI


Days after the Union government clarified that it is not mandatory for customers to pay service charge on bills levied by restaurants and eateries, the National Restaurant Association of India (NRAI) has placed the onus largely on the customers to exercise their discretion on whether or not to patronise restaurants that levy service charge. They have also left it up to restaurants to have their own policy on whether to levy service charge and inform patrons beforehand, or do away with it completely.

Service charges range from five per cent to mostly 10 per cent, sometimes even higher in fine dining restaurants. “Our stand is clear. Service charge is the true value of service provided by the staff of a restaurant,” said Riyaaz Amlani, President of NRAI.

Asked about customers who may not be satisfied with the service provided and may not want to pay service charge, Amlani added, “Service charge is levied to create a great experience for the customer. It is not just for the waiter, but for all who work on the team — right from the valet, to the one cleaning toilets, to waiters, and even the cook. Service charge is a system that works for all — the restaurant, the customer, and the staff. It incentivises the service that is being provided.

“What people are confused about is the distinction between tips and service charge. The latter is a centralised collection that shows that things are transparent. It is a great practice and perfectly legal. TDS is cut, and it is above board. About 70 per cent is distributed equally among the staff, and the rest is kept for tax, pilferage, grooming, emergencies, or if there is any breakage. The consumer court and Supreme Court have said it is perfectly legal,” he added. In an official release on December 8, NRAI cites different judicial and quasi-judicial pronouncements to support that service charge can be imposed by hotels and restaurants. It states that: “The same has been upheld by the National Consumer Disputes Redressal Commission in Nitin Mittal vs. Pind Baluchi, (2012) NCDRC 444; by Monopolies and Restrictive Practices Commission, New Delhi (MRTP) in 2001; and Judgments passed by Hon’ble Supreme Court in the cases of Wenger & Company and others vs. their workmen (1963) and Ram Bagh Palace Hotel, Jaipur Vs. The Rajasthan Hotel Workers Union, Jaipur (1976).”

“Our restaurants provide a fine dining experience. It is accepted as a norm and levying service charge in graded restaurants is a world-wide practice,” said Anjan Chatterjee, founder and managing director of the Mainlaind China Group.

Indian Hotel and Restaurant Association (AHAR) said that in the end the first right of refusal is always of the customer. “The issue as such is of fine dining restaurants and not of Udipi restaurants. The charges are mentioned in the menu and we will be asking members to also put up a disclaimer at the entrance,” said AHAR President Adarsh Shetty.

Source: DNA India

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