Monday, April 24, 2017

Unfair Business Practices of Hotels and Restaurant industry by charging service charges compulsorily

Unfair Business Practices (UBP) of Hotels and Restaurant industry by charging service charges compulsorily
The visitors to this blog may refer to the following articles published in this blog wherein it was brought out as to how the hotels and restaurants are adapting to the unfair business practices of charging service charge/ tip compulsorily. The link of some of these articles were sent to the concerned departments as well as Hotel and National Restaurant Association of India. In fact when the author of the post took up his issue with the restaurant, the amount of service charge in compulsion was refunded back by the restaurant through cheque. 

2. 21st April 2015:  Are Restaurant and Hotels adapting to unfair business practices? 
3. 6th January, 2017: Weather Department of Consumer Affairs is serious enough to address the unethical business practices  of charging service charges and VAT by Restaurants and Hotels Industry?

4. 18th January, 2017:  Poor dining service at Le Chef Restaurants in Sector 37 Faridabad viz-a-viz charging of service charges by Restaurants and Hotels:

Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India vide their letter No. J-24/9/2014-CPU(pt.) dtd. 21st April 2017 has now issued guidelines on fair trade practices related to charging of service charge from consumers by hotels/restaurants.  As per the said guidelines, the hotels and restaurants are not allowed to charge the service charge or tip. The service charge column of the bill may be left blank for the consumer to fill up before making payment. 

In view of above, the consumers dining or for any other services in restaurants and hotels  are advised to exercise their option of weather to pay or not to pay the service charges or how much to pay if opting to pay. The guidelines issued by Department of Consumer Affairs (DCA) are reproduced for ready reference of the visitors. 

No.J-24//2014-CPU (pt.)
Government of India
Ministry of Consumer Affairs, Food and Public Distribution
(Department of Consumer Affairs)
                                                                                                        Krishi Bhawan, New Delhi
                                                                                                                  The 21st April, 2017


Whereas, the Department of Consumer Affairs, Government of India is mandated to ensure that consumers are protected as per the provisions of the Consumer Protection Act, 1986 (hereinafter referred as ‘The Act’);
Whereas, a customer visiting a hotel or restaurant for availing its hospitality, which includes buying the food & beverages and availing services connected therewith or incidental thereto for consideration, falls under the definition of consumer as per the Act;
Whereas, it has come to the notice of this Department that some hotels and restaurants are charging tips/gratuities from the customers without their express consent in the name of service charges;
Whereas, it has also come to the notice of this Department that some customers have been paying tips to waiters in addition to service charges under the mistaken impression that service charge is a part of taxes;
Whereas, it has also come to the notice of this Department that in some cases hotels/restaurants are restraining customers from entering the premises if they are not in prior agreement to pay the mandatory service charge;
Whereas, public interest has arisen due to a number of grievances reported against mandatory levy of service charges by the hotels and restaurants;
Now therefor, the Government considers it appropriate to clearly distinguish between the fair and unfair trade practices in respect of service charges, charged by the hotels/restaurants, and issues the following guidelines:
(1)                 A component of service is inherent in provision of food and beverages ordered by a customer. Pricing of the product therefore is expected to cover both the goods and service components.

(2)                Placing of an order by a customer amounts to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes. Charging for anything other than the afore-mentioned, without express consent of the customer, would amount to unfair trade practice as defined under the Act.

(3)                 Tip or gratuity paid by a customer is towards hospitality received by him/her, beyond the basic minimum service already contracted between him/her and the hotel management. It is a separate transaction between the customer and the staff of the hotel or restaurant, which is entered into, at the customer’s discretion.

(4)                   The point of time when a customer decides to give a tip/gratuity is not when he/she enters the hotel/restaurant and also not when he/she places his/her order. It is only after completing the meal that the customer is in a position to assess quality of service, and decide whether or not to pay a tip/gratuity and if so, how much. Therefore, if a hotel/restaurant considers that entry of a customer to a hotel/restaurant amounts to his/her implied consent to pay a fixed amount of service charge, it is not correct. Further, any restriction of entry based on this amounts to a trade practice which imposes an unjustified cost on the customer by way of forcing him/her to pay service charge as condition precedent to placing order of food and beverages, and as such it falls under restrictive trade practice as defined under section 2(1)(nnn) of the Act.

(5)                     In view of the above, the bill presented to the customer may clearly display that service charge is voluntary, and the service charge column of the bill may be left blank for the customer to fill up before making payment. 

(6)                       A customer is entitled to exercise his/her rights as a consumer, to be heard and redressed under provisions of the Act in case of unfair/restrictive trade practices, and can approach a Consumer Disputes Redressal Commission/Forum of appropriate jurisdiction.

Friday, April 21, 2017

I could never believe may be selling spurious products

I could never believe Snapdeal selling spurious products. However, the response of L’Oréal Professionnel Liss shared by one of the consumer confirms so. 

A consumer happen to purchase some cosmetic products of L’Oréal Professionnel Liss through However, the consumer suspected it to be fake and hence approached the company to know its genuineness. The consumer shared the batch details of the items with the company and requested the manufacturer to verify the credentials. The response of the L’Oréal Professionnel Liss was shocking. The same is therefore shared on this blog for wider awareness of the perspective buyers.

Thank you for writing to us with regard to your feedback on the L’Oréal Professionnel Liss Unlimited Shampoo 250 ml (2 units), which you had purchased online from the seller ”Sai Nath Stores” on

At the onset, we would like to thank you for drawing our attention to your concern.  

We would like to inform you that the L’Oréal Professionnel products are exclusively available in professional salons and the products are not retailed through any online or retail channel. For consumer’s awareness and to help them to make a choiceful purchase, we have specified “For sale only in professional beauty salons” on all the home care retail products. The L’Oréal Professionnel products you had purchased from have not been supplied by the company to the portal.   

We would also like to inform you that the batch details of L’Oréal Professionnel Liss Unlimited Shampoo 250 ml (B526246 18-10/2015) shared by you do not match our records. Hence, the products you had purchased seems to be spurious. In the view of above, we request you to kindly take up the issue with

For future, we urge our loyal consumers like yourself to purchase L’Oréal Professionnel home care – retail products from salons only, so that we can guarantee the quality and the performance of our products. To find a salon close to your vicinity, you may also visit

Please note: L’Oréal Professionnel does not own or operate salons in India, but provides training and merchandising support to select professional salons in India." 

Monday, March 27, 2017

Unfair Business Practices of Banking industry charging disproportionate service charges.

Shri S.K. Virmani, Consumer Activist associated with Jago Grahak Jago movement have been raising voice against unfair business practices of banking industry. Reserve Bank of India (RBI) is silent on such unfair business practices. Discussing on CNBC Awaaz Pahredar.


Friday, March 24, 2017

Are you also paying VAT on the discounted prices offered by retailers/ brands?

An article titled "Illegal charging of VAT on discounted prices by brands/retailers" was published on 2nd July 2014 in this blog, the link of which is

Now the Hon'able National Commission has adjudicated that the charging of VAT on the discounted prices is unfair business practices and amounts to overcharging. The brief of the judgement is as:

The addition of VAT on discounted price amounts to overcharging and unfair trade practice

National Consumer Dispute Redressal Commission, (NCDRC) New Delhi in Revision Petition No.3156 of 2016 of BENETTON INDIA PRIVATE LIMITED (Petitioner) Vs. RAVINDER SINGH (Respondent/Complainant) upheld the order of the State Commission and District forum directing the BENETTON INDIA PRIVATE LIMITED to pay compensation of Rs.5000/- to the complainant besides Rs.1000/- against cost of litigation.  
The respondent complainant on 11.07.2014 purchased one trouser from the petitioner opposite party vide bill no. 769-3375 dated 11.07.2014. The trouser was offered on 30% discount on MRP, which as per tag was Rs.2299/- inclusive of all taxes. The petitioner after discounting the MRP by 30% of Rs. 2299/- sold the trouser for Rs.1609/-. However, on the aforesaid discounted price, the petitioner charged 6.05% VAT amounting to Rs.97.36/-. According to the complainant, when the trouser was offered on 30% discount on the tag price, which was inclusive of taxes, the addition of VAT on discounted price amounts to overcharging and unfair trade practice. The complainant thus filed consumer complaint in the District Forum, Amritsar.
The petitioner argued the Complaint by filing written statement, while denying the allegation of over charge or unfair trade practice on its part, it was pleaded that subject trouser was offered on 30 % discount subject to payment of VAT etc. Therefore, the allegation made by the complaint that the petitioner had illegally charged VAT is without any basis.
 On the analysis of the pleadings and evidence adduced by the parties, the district forum found force in the claim of the respondent complainant. Consequently, the district forum allowed the complaint and the complaint and directed the petitioner opposite praty to refund a sun of Rs. 97.36 i.e. excess charged from the complaint in the form of VAT. The district forum also directed the opposite party to pay compensation in the form of VAT. The district forum also directed the opposite party to pay compensation of Rs. 5000/- to the complainant besides Rs.1000/- against cost of litigation.
Aggrieved by the order of the District Forum, the petitioner approached the State Commission in appeal. On appreciation of the material placed on record, the State Commission concurred with the finding of the District Forum and dismissed the appeal.
National Commission did not find any jurisdictional error or material irregularity in the impugned order which may call for interference in exercise of revisional jurisdiction. Therefore revision petition is dismissed.

Discussing issues pertaining to Legal Metrology (MRP, Under weight etc.)

Legal Metrology issues pertaining to MRP, under weight etc. - Shri S.K.Virmani associated with Jago Grahak Jago movement. Discussion on Sahara Samay