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Eateries cannot add a service charge to bills, says Goyal

New Delhi: Union food and consumer affairs minister Piyush Goyal on Friday said that restaurants cannot add "service charge" to the food bills and it should be left to the discretion of diners to leave behind tips.
The minister said the service charge in the bill is "chhal" (deceit) and the eateries cannot mislead people by charging for service. "It has to be the consumer's choice. You (restaurants) cannot add a service charge to a bill... If you feel that some more benefits are to be given to employees, it cannot be forced on customers. You can raise prices to give hikes... There are no price controls on restaurants. We have not stopped restaurants from increasing their prices. It will be wrong for restaurants to say that they will suffer losses if the service charge is withdrawn," Goyal said while responding to a query on service charges by restaurants.
The minister said that often the service charge was not mentioned clearly and it varied across restaurants. On Thursday, his ministry had asked eateries to stop the practice of including service charges in the bill arguing that people often interpret "service charge" as "service tax". It had also rejected the industry's arguments that as customers enter a restaurant they enter into a contract to pay the charge.
The ministry had cited that the current Consumer Protection Act specifies unfair contracts that adversely impact the consumers.
Goyal said there are some countries where service charge is compulsory and hence people are aware of the norms. But in India, there is no such rule or a law imposing service charges.

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