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

Thursday, March 9, 2017

Weather Banks charging any transaction fee for transacting through debit card a violation of RBI Regulations

Do you face any issue with Banks or the Merchants charging any additional fee as transaction fee for transacting through debit cards ? 

Reserve Bank of India (RBI) has issued order against Pernicious practices of select banks deterring customer protection and accounting integrity vide their order No. RBI/2013-14/292 DBS.CO.PPD No. 3578/ 11.01.005/2013-14 dtd. 17th September 2013. The plain reading of the above referred order suggest that the Banks or any Merchant cannot charge any additional amount towards transaction fee for making payment through usage of debit cards. The relevant portion of the order is reproduced for ready reference of the readers so that they are able to raise their voice against unethical business practices of those banks and the merchants who are charging any transaction fee.

"4. Levying fees on debit card transactions by merchants - There are instances where merchant establishments levy fee as a percentage of the transaction vale as charges on customers who are making payments for purchase of goods and services through debit cards. Such fee are not justifiable and are not permissible as per the bilateral agreement between the acquiring bank and the merchants and therefore calls for termination of the relationship of the bank with such establishments.

5. Though many banks have appreciated our concerns and have discontinued with the above mentioned practices/ products, some of them still seem to persist with them. These practices/ products thwart the very principle of fair and transparent pricing of products which beholds customer rights and customer protection, especially, in the more vulnerable retail segment. Such practices thus violate, both in letter and spirit, various provisions of our MC on Interest Rate on Advances and therefor, you are advised to strictly desist from these practices hence forth.

Tuesday, March 7, 2017

Credit Card Issues 2

Credit Card Issues _ Consumer Activist Shri S.K.Virmani associated with Jago Grahak Jago movement
discussing on NDTV

Adultration in Petrol

Petroleum industry is facing acute problem on adulteration of petrol. Consumer Activist Shri S.K.Virmani associated with Jago Grahak Jago movement in India for Consumer Empowerment discussing on Zee News on the subject of Adulteration in Petrol.

Friday, March 3, 2017

Opposing Anti Consumer Practices of banks.

Recently HDFC, ICICI and Axis Bank have introduced transaction fee for deposits and withdrawal from saving bank accounts. SBI and other banks soon will be charging the same.

It is unethical business practices of the banks charging fee for deposits and withdrawal of cash from your own account. The banks say that it is to discourage the citizens from cash transactions. If that is the case so then why fee being charged for cashless transactions? Where is the cashless economy?

Wednesday, January 18, 2017

Poor service at Le Chef Restaurants in Sector 37 Faridabad viz-a-viz charging of service charges by Restaurants and Hotels

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 has brought out a press release advising Restaurants and Hotels not to charge service charge compulsorily into the food bill and waive off the same if the diners do not wish to pay. The ground realities seems to be different specially in view of various media reports. I have also stated in my various posts in this blog that the Restaurants have been adapting to unethical business practices in charging service charge compulsorily and also wrong charging of VAT on 100% value of the food bill.

I have visited a restaurant in Sector 37 Faridabad named Le Chef. The restaurant were earlier charging service charge by clubbing with the VAT thus misleading the diners. A bill is given below:
As can be seen above that Le Chef charged VAT at the rate of 28.13% in their bill No. 1010 dtd. 29/05/2015. Over and above an amount of Rs. 100/- was also paid as 'Tip' as the immediate glance of the bill indicated that the restaurant has not charged any service charge. However, when glancing again later on, the asterik below indicated that VAT charged was including 15% as service charge. Hence the Restaurant owner has charged for the tip two times, one by misleading the diners and 2nd time at the time of taking tip separately. Ideally the charging of service charge by adding in the VAT should have been treated as crime and the books of account should have been seized by the Trade Tax Authorities.

The matter was referred to Trade Tax, Haryana. The Trade Tax Department was requested to confirm as to whether the Le Chef has paid whole amount of the VAT charged in the bill to the tax authority as charged under the head 'VAT'.  However, nothing happened leading to believe that  Trade Tax Department must be hand in glove for such evasion. 

Again visited Le Chef Restaurant with 8 more guests on 13/01/2017 to celebrate famous "Lohiri" festival. Surprisingly the service of the Restaurant was so poor that it was very difficult to entertain the guest. The soup served was cold. Even the dishes were taken off from the table after quite a long time. When the main course was to be served, the waiter did not serve the bowls. On demanding the bowls, the waiter supplied plastic bowl. On asking, the waiter informed that the "की बर्तन सब झूठे पड़े हैं. ". We had no other option but just to remain silent in the best interest of the guest entertainment. We were surprised to receive the bill for an amount of Rs. 2,682/- which was including an amount of Rs. 206 towards service charge. 
The quality of the service was too cheap that we decided not to pay the tip of Rs. 206 charged as service charge. In the light of the press release of Department of Consumer Affairs, we asked cashier to waive off the service charge as we do not wish to pay. The cashier refused to do so and asked that this amount has to be paid irrespective of whether the service was good or bad. A feedback to the restaurant was handed over followed by a complaint by email. The Restaurant owner in the first instance itself should have contacted the diner after getting the feedback, had the Restaurant owner a quality conscious and there should not have been no occasion to complain subsequently. Having no response received from the Restaurant, the complaint was taken up by email on 16th January 2017.

A copy of the complaint to Le Chef is reproduced below. However, there is no response laeding to believe that the Restaurant is following unethical business practice and the service need to be rated as poorest. 

Email Complaint to Le Chef:
"We in the group of none (9) person including 6 guests had visited your restaurant on 13/01/2017. We all including guest had a very poor experience while dining. The daal and sabzi was served at the cold temperature. Not only the cool, it was served in disposable bowls saying " बर्तन झूठे पड़े हैं इसलिए यही कटोरियां हैं. "
We all were shocked to see the waiter response. We did not speak at that time to create any awkward situation. We were further surprised when the waiter and the cashier even refused to reverse service charge of Rs. 206.70 being 10% of food value+VAT+ service tax etc. The same were charged in compulsion against the principle of Consumer Protection Act 1986. Department of Consumer Affairs had already directed that the service charges need to be optional and waived off if the consumer wishes so. This was referred to cashier who stated that it is compulsorily and do not care for the directions issued by Govt. of India.
A copy of the bill number GF/170113/8 is attached for ready reference for your further appropriate action else the matter shall be referred to appropriate authorities including publishing appropriately on the public domain."

Friday, January 6, 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?

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? 

I have written an article titled "Are Restaurants and Hotels adapting to unfair business practices?" on this blog on 21st April 2015, the link of which is

The said article stated importance of making service charges being charged by Restaurants in the form of tip need to be made optional and let it be left to the option of the diners whether to pay it or not to pay. Department of Consumer Affairs, Govt. of India has recently issued a press release No.  156064 which appeared in newspapers on 2nd January 2017. A copy of the press release is copied here for ready reference.
Department of Consumer Affairs have advised Restaurants and Hotel Industry to make service charge as optional and to waive off these charges if the consumer feel dissatisfied with the service. The advise to the Industry seems to have been softened despite a fact that the services charges are being charged from the consumers in an unethical manner. The facts have been substantiated in the article on 21st April 2015 which can be pursued further.  As stated therein:
1. When the Ministry of Finance has already notified for the purpose of service tax that the 40% value of the food bill is towards services and hence enacted that the service tax shall be applicable on 40% of the value of the bill, any additional amount charged in the bill under head service charge amounts to double charging. The food bill already has 60% value as cost of material and 40% value as service towards serving to the diners. 
2. As the advise states to waive off the service charges if requested by the consumer, it means that the charges could be added up in the bill. The moment the diner request to waive off the charges, it become discretion of the Restaurant whether to waive off or not more so because the Department of Consumer Affairs press release is of advisory in nature may be followed or not.
3. The compulsorily levy of service charges is not in a good taste as it become chargeable irrespective of whether the services offered have been good or not.
4. Despite the fact that the Restaurants were charging service charge in the bills, the waiters keep expecting the 'Tip'. More soever, the service charges are being mislead taken as "Govt. taxes" and the consumers also pay additional tip. It become double charging the so called tip.
5. The people go to hotels and restaurants for entertainment and relaxation, and not for arguing against levying of service-charge in case of dis-satisfactory service. As such most of the people do not care for clarifications/notifications issued by government-departments, thus paying ‘service-charge’ unnoticed by them being at their discretion. If the hotels/restaurants wish to pay something extra to their staff, they may do it at their own rather than forcing customers for 'compulsory’ contributions. It is also known fact that even after levy of ‘service-charge’ in bills, serving-staff stand before customers in anticipation of ‘tips’
 6. Some of the media reports have also checked in the few Restaurants in New Delhi. The Restaurants have clearly refused to waive off the service charges. It means that if any consumer is dis-satisfied with the services, he/she cannot opt 'not to pay' as the same is likely to result into tussle between Restaurants employees and the consumers. Indirectly despite the advise of Govt. of India as to make service charge as optional, these charges shall continue to be forced upon the consumers with a little option of not to pay. 

Department of Consumer Affairs may reconsider the issue and make it mandatory not to charge the service charge in the bill else face cancellation of their licences. While it is expected Govt. of India gets sensitized to the issue, it will also look into the way VAT is being charged on 100% of the value of the bill as well as charging of VAT and Service Tax on beverages which are sold on MRP. Hon'ble High Court of Uttarakhand has already adjudicated that the VAT is chargeable on 60% of the value of the bill as 40% of the bill is already taxed with service tax.