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Service charge: Only if service found satisfactory

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December, the month of new promises and festivities brings with itself joy and smile on the faces of everyone- the reasons being but obvious: Christmas, weddings, New Year’s Eve and much more. The atmosphere in offices and at homes is merry and laid back with people looking forward to Christmas holidays, plans and the New Year’s Eve.

Also frequent restaurant and lounge visits with families, colleagues and friends increase in this part of the year owing to the cool weather and less work and study pressure.

I happened to visit a popular food joint on my birthday and was visibly surprised and annoyed to find the service not as expected based on the experience of my past visits and the reputation of the food joint. But the thing which pissed me off was the 14% service charged levied by the restaurant. I stared at the percentage for about 2 minutes before paying up for the bill leaving no tips.

What we don’t know is “Service Charge” is a smart alternative to the “voluntary tips” being used by the restaurants, pubs, lounges which gets clubbed in your final bill amount which usually varies from 5 to 20%.

What’s funny is it is not a tax unlike “Service Tax” and is not demanded by the government. Unsuspecting and ignorant customers usually ended up paying the service charge thinking of it as a “Tax” levied by the government.

Furthermore, there are no set regulations or guidelines to govern the percentage of the service charge a restaurant could levy. Hitherto, this service charge was a thing of compulsion, heavy on the customers’ pocket, irrespective of the fact whether he enjoyed the meal and the service rendered.

In the wake of several complaints filed by the consumers on the compulsory payment of service charge, the government announced that a consumer can now refuse to pay the service charge if he/she is not satisfied with their dining experience. Furthermore, according to the Consumer Protection Act, 1986 the Department of Consumer Affairs called for clarification from the Hotel Association of India, which in revert said that the service charge is completely discretionary and, is therefore deemed to be accepted voluntarily. The Central Government has asked the State governments “to advise the Hotels/

Restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the ‘service charges” are discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off.”

The National Restaurant Association of India (NRAI) representing independent restaurants and food chains had a different view to the issue whereby it issued a statement implying that customers were free not to eat at a restaurant if they did not wish to pay the service charge levied by it. According to NRAI levy of service charge is a “common and accepted” practice by the restaurants.

The statement of NRAI was criticized on social media and was found to be insensitive and arrogant.

The next time you happen to visit a restaurant or a café/lounge/pub and if you’re dissatisfied with the experience, remember — you have the right to say no to that service charge printed on your bill.

Bon Appétit !!

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Like +0 Object -0 kianganz 03 Jan 17, 17:42
What I've been wondering about in respect of this story is this: what if the restaurant prominently writes on its menu that a 10% service charge is levied on all items in the final bill.

Surely that constitutes a contractual offer and acceptance, in the absence of any express statutory or consumer protection provision to the contrary?
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Like +0 Object -0 Confused Zeus Says . . 04 Jan 17, 09:28
One could argue that such a contract is opposed to public policy (law declared by the SC) and hence void, Kian.
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Like +0 Object -0 kianganz 04 Jan 17, 11:54
Thanks Zeus, very interesting... I could imagine if that was ever tested in court, it could become quite messy...

Consider also, for instance, permutations like a menu that says: "For parties of more than 10 patrons, we will levy a 10% service charge."

Sagar, agree that 'satisfactory experience' is quite wishy washy. Then again, service charge has always sort of sat uneasily, particularly since I'm pretty sure 90% of restaurants don't give the service charge back to the servers like tips but pocket it.

And in effect, because there's SC on a menu, most diners wouldn't then also tip additionally in cash, so the people most stiffed by this are the workers in the industry rather than the restaurant owners.
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Like +0 Object -0 sagar-gaba 04 Jan 17, 11:44
Firstly, thought the government notification has come as a boon for the consumers, it nevertheless is VAGUE in its approach and wordings as the term "satisfactory experience" can be different for different consumers. Furthermore there is a flip side to this whereby consumers fraudulently declare the service as unsatisfactory to avoid payment of service charge. I'm expecting a more concrete notification in the coming days.

As regards your query,it does constitutes a contractual offer but having a pre-condition/requisite for its fulfillment i.e Finding the Service satisfactory. Prominent mention of levying a 10% SC shall be subject to the consumers finding their dining experience worthy. Compulsory levying of the SC irrespective of the consumer's contention of finding the service as unsatisfactory would be going against the Government's notification
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