The Central Consumer Protection Authority directed hotels and restaurants not to impose LPG or fuel surcharges by default, calling it unfair trade. The regulator clarified such input costs must be included in menu prices, not charged separately to customers.
The Central Consumer Protection Authority (CCPA) has issued an advisory stating that hotels and restaurants cannot impose extra charges such as ‘LPG charges’, ‘gas surcharge’ or ‘fuel cost recovery’ by default.
The regulator said such practices amount to unfair trade under the Consumer Protection Act, 2019.
In its March 25 advisory, the CCPA explained that input costs like fuel, LPG and electricity are part of normal business expenses and should be built into menu prices rather than recovered through separate mandatory charges on customers.
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The authority warned that failure to comply could invite action under the Consumer Protection Act.
The advisory was issued against the backdrop of a wider LPG supply squeeze in India caused by geopolitical disruptions in West Asia. Industry reports say the conflict involving Iran has affected global energy supply chains, notably through the Strait of Hormuz a key route for most of India’s LPG imports.
The CCPA’s move followed complaints received via the National Consumer Helpline and media reports indicating that restaurants and hotels were increasingly adding such levies to bills under various labels, over and above the displayed price of food items and applicable taxes.
Referring to its July 4, 2022 guidelines on service charge, the CCPA reiterated that the price of food and beverages already includes both goods and service components. Any additional mandatory charge beyond the displayed price would constitute an unfair trade practice, the CCPA said.
The advisory said that levying such charges shows a lack of transparency and effectively passes unjustified costs onto consumers. It also warned that using different names for these levies appears to be an effort to evade existing guidelines that bar default or automatic additional charges.
Adding that they would be treated as violations of its earlier guidelines, the authority noted,
“Such charges, irrespective of the nomenclature used, are in the nature of a service charge or any other additional fee collected over and above the price of food and beverages,”
Accordingly, the CCPA directed that no hotel or restaurant shall levy such charges automatically or by default in bills. It further required that menu prices must reflect the final amount payable by consumers, excluding only applicable taxes.
The advisory stressed that consumers must not be misled or forced to pay any extra charge that is not explicitly part of the menu price and is not voluntary in nature.
It also outlined remedies for consumers who are billed such charges: request removal of the charge from the bill, file a complaint with the National Consumer Helpline, or approach consumer commissions for relief.
The advisory has been circulated to all States and Union Territories, district collectors, the Ministry of Tourism and industry bodies including the Federation of Hotel and Restaurant Associations of India (FHRAI) and the National Restaurant Association of India (NRAI).
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