Service charge row: Restaurant & Hotel Association head says its not illegal; claims grave injustice to junior staff

President of the Hotel and Restaurant Association of Western India was asked how do managements of certain restaurants waive the service charge when customers object, Mr Shetty said “it was being done to maintain relationship with customers”.

Staff ReporterUpdated: Saturday, January 21, 2023, 12:58 AM IST
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Mumbai: Responding to a report in the Free Press Journal on Friday, president of the Hotel and Restaurant Association of Western India, Pradeep Shetty, said the service charge levied by restaurant managements is not illegal. He told this newspaper that in any case “only 20%” of the restaurants levy this charge. 

When asked how do managements of certain restaurants waive the service charge when customers object, Mr Shetty said “it was being done to maintain relationship with customers”.

He said “grave injustice” is being done to restaurants’ junior staff like waiters, kitchen helpers and cleaners by the Central Consumer Protection Authority, which has asked restaurant managements not to levy the charge.

Shetty: Worldwide, customers happily pay service charge

“Service charges levied in restaurants from 10-15% are legal and accepted globally. This charge is collected by the management on behalf of junior staff and distributed monthly. The Goods and Service Tax (GST) is also paid on service charge by restaurant owners and the accounts are audited and submitted to the Income Tax department,” he added.

Mr Shetty said, “Worldwide, customers happily pay service charge, which is mentioned on the menu card and customers are well aware of it before placing their orders.”

If consumers/ customers don’t agree with it, they are always free to go to other restaurants. He noted that the CCPA’s order has been stayed by the Delhi High Court. “Shockingly government agencies always singled out restaurants and given step motherly treatment to the most demanding capital, labour and energy intensive, multi-licensed restaurant and food businesses. It is pertinent to note that the hospitality industry is the largest employer of skilled and unskilled workers after farming. It also contributes 9.7% to the GDP of India,” Mr Shetty said. He noted that the banking, airlines and other sectors also levy a service charge.

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