New Delhi/Noida: The Confederation of Residents Welfare Associations (CONRWA) has written to Prahlad Joshi, Union Minister of Consumer Affairs, Food and Public Distribution, demanding a complete ban on the practice of levying service charges by hotels and restaurants across the country.
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In the memorandum submitted to the minister, CONRWA highlighted that it had earlier written on the issue on September 5, 2017. Following that, the government had directed that service charges be made optional. However, despite the directive, most hotels and restaurants continue to add service charges to bills by default, without the customer’s explicit consent.
Service Charge Imposed Under Social Pressure
According to CONRWA, service charges are being added to customer bills without consent. Patrons, often accompanied by family, friends or clients, hesitate to ask for the charge to be removed, fearing social awkwardness. Restaurant owners exploit this hesitation to continue the unlawful practice of charging extra.
Service Charge Unlawful and Equivalent to a Parallel Tax
The letter emphasises that while restaurants have every right to price their products, once a price is fixed, no additional charges other than government taxes, such as GST, should be levied. Adding a service charge over and above this constitutes an illegal practice and is akin to imposing an unauthorised secondary tax, CONRWA argued.
Tipping Is Voluntary, Not Mandatory
The association also stated that tipping should remain a voluntary gesture and cannot be enforced through billing mechanisms. Including service charges in bills turns the voluntary act of tipping into a compulsory payment, which is not only unethical but also exploitative.
Call for Government Action
CONRWA urged the Union Minister to take immediate cognisance of the issue and initiate steps to ban the practice entirely in the interest of consumer rights. The body reiterated that service charges must not be imposed in any form and should be treated as illegal collections.