The Managing Directors/CEO's/Owners/Director/Partners/General Managers
All FHRAI Members
CC: All Members of the Executive Committee
All Regional Associations
SUB: CENTRAL CONSUMER PROTECTION AUTHORITY (CCPA) GUIDELINES ON SERVICE CHARGES BY HOTELS & RESTAURANTS
Dear Member,
We wish to inform you that on 04.07.2022, the Central Consumer Protection Authority (CCPA), under the aegis of Ministry of Consumer Affairs, Food and Public Distribution has issued guidelines with regard to levy of services charges in hotels and restaurants. A copy of the Guidelines is enclosed for your kind reference and perusal.
The CCPA guidelines stipulated the following points:
- No hotel or restaurant shall add service charge automatically or by default in the bill.
- Service charge shall not be collected from consumers by any other name.
- No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer's discretion.
- No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.
- Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.
FHRAI has taken legal advice to ascertain the applicability of the Guidelines and its implication on the hospitality businesses.
Key highlights of the legal advice received by FHRAI are given below for the information and compliance of our members:
- CCPA Guidelines are not in the nature of law and do not have the sanctity of law.
- The said Guidelines are not binding.
- Restaurants can continue to impose service charge provided that they make it clear both in the menu and also in the bill that the service charge is optional and entry into the Restaurant is not subject to accepting the service charge.
- Restaurant can impose service charge as long as customers have the choice to pay for it fully or in part.
- In the event a Restaurant or Hotel does impose mandatory service charge by itself it would not be in violation of law. However, such Restaurants will be open to consumer complaint for unfair trade practice or restrictive trade practice. Such Restaurants may also be open to an investigation under section 19 of the Consumer Protection Act, 2019 followed by an order under section 20. The order under section 20 and by the Consumer Forum would be subject to the right of hearing and appeal.
Therefore please be informed that the CCPA Guidelines dated 4.07.2022 do not impose fetter on the business practice of Hotels and Restaurants.
With best regards,
Jaison Chacko
Secretary General
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The Federation of Hotel & Restaurant Associations of India
Regd. Off.: B-82, 8th Floor, Himalaya House, 23 K.G. Marg, New Delhi - 110 001
Tel.: 011-40780780, Email: fhrai@fhrai.com, Website: www.fhrai.com