Many may have cheered the fact that the government issued a circular saying that restaurant patrons who did not want to pay service charge could refuse to do so.

But one of India's biggest restaurant bodies has said that they will not stop billing customers service charges any time soon. The National Restaurants Association of India (NRAI) issued a statement on Monday, saying that all restaurants that asked patron service charges were completely authorised to do so.

In a conversation with ScoopWhoop News, the president of the NRAI said that restaurants that imposed service charges on patrons will continue to do so.

"We will continue charging service charge," he told ScoopWhoop News.

Representational image | Source: Reuters

Why is there service charge?

Amlani, who is CEO of Impresario Entertainment & Hospitality that runs restaurant chains like Social and Smoke House Deli, explained why restaurants seek a service charge. Amlani said that it is difficult for restaurants to get waiters to share tips given by patrons.

"A tip is paid only to the person who serves at the table, it is not shared. There are other staff members who are involved in other duties like cutting, cleaning, etc who also deserve a share of it," he said from Mumbai in a telephonic interview.

He also pointed out that service charge is charged by restaurants across the world.

Representational image | Source: Reuters

"In addition, there is service tax, VAT and TDS paid on the service charge. It is completely above board," he said.

Amlani said that service charge it allowed restaurants to keep it clear about how much is distributed.

"We can raise prices by 10 percent to replace service charge but that wouldn't be fair to customers. Also customers may still tip and that would be unfair to them," he said.

Many small restaurants in India have no service charge | Source: AFP

Customers are free to go to not go to restaurants with service charge

Amlani said that restaurants state upfront that they charge a service charge and a customer who agrees to eat there is also agreeing to pay it.

"If you are not happy with a plate of pasta at a restaurant can you say that you will not pay for it? You can give me a critical review on Zomato, you can slam it on social media, you can tell people not to go there, but can you refuse to pay it?", he said.

Will customers pick restaurants based on service charge? | Source: AFP

Amlani said that a customer can take it up with the restaurant if they are unhappy with food or beverages served, but it remains the discretion of the eatery to decide whether it wants to make it up to the customer in any way.

"A customer can go to some other restaurant if they don't want to pay service charge. If they feel a restaurant is not giving value for money, they will go to an other restaurant," he said.

Ministry order is not binding

The NRAI president said that the order from the Consumer Affairs Ministry came without consulting the restaurant industry in any way and without any representation from them.

If the government was so concerned about the plight of restaurant patrons, it could always do away with taxes like service tax and Value Added Tax (VAT), Amlani said.

Eateries will not stop charging service charge | Source: Zomato

Amlani pointed out that they had a Supreme Court order in their favour to impose service charges and the directive from the government was not binding on them in any way.

"This is not legislation and we are perfectly within our rights to have service charges. This is a clear case of the ministry overstepping its jurisdiction," he said.