In case of unfair and restrictive trade practices, customers are entitled to exercise their right to be heard and redressed under provisions of the Consumer Protection Act, 1986, and can approach the consumer dispute redressal commission or forum.
"If there is mandatory levy of service charge, customers can file a complaint in the consumer court," a senior consumer affairs ministry official told PTI.
The current consumer protection law does not empower the ministry to go for hefty fines and stringent action against violations. However, the new Consumer Protection Bill under which an authority will be set up will have powers to take action, the official explained.
Last week, Paswan had said the ministry had prepared an advisory on the service charge issue and the same was sent to the PMO for approval.
A number of complaints from consumers have been received that hotels and restaurants were asking for 'service charge' in the range of 5-20 per cent, in lieu of tips, the ministry had said earlier.
Reacting to the guidelines, the Hotel and Restaurant Association of Western India (HRAWI) said the service charge levying is a global practice and a legitimate tax.
"Service charge is a global practice and one that has been in force in India for more than half a century. The charge is neither hidden nor disguised. It is categorically and boldly mentioned in the menu," Hotel and Restaurant Association of Western India (HRAWI) President Dilip Datwani said.
"A customer patronises a food outlet with the full knowledge that he or she will be levied a service charge. It is not just hospitality (sector), but many businesses levy such charges. We cannot understand why we are being singled out," he wondered.