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Mumbai restaurant fined ₹25,000 for levying ‘mandatory’ service charge: ‘Highly objectionable, not justified’
A district consumer commission said that the ‘mandatory’ service charge is not only ‘highly objectionable’ but is ‘illegal’ as well.
A restaurant in Mumbai was fined ₹25,000 by a district consumer commission for levying a ‘mandatory’ 5% service charge on the bills of one of its customers. The commission also directed the restaurant to refund the ₹29 service charge.
According to a Times of India (TOI) report, a lawyer named Yogesh S Patki filed a complaint before the South Mumbai District Consumer Disputes Redressal Commission against Girgaon-based Cream Centre owner Prince Cuisines Pvt Ltd in 2017. The commission has now ruled in favour of the lawyer and termed the service charge as “highly objectionable” and “illegal”.
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The commission said, “It is the bouquet of additional services that complete the experience of customers who choose to dine in at the restaurant. Building this narrative to collect 5 per cent mandatory service charge from customers is highly objectionable as well as illegal and hence cannot be justified at all.”
The panel also stated that if the restaurant levies a mandatory service charge in addition to the food and beverage bills, it implies that the services provided are of a specific standard and quality. This is because the restaurant offers a range of other services, including the restaurant's ambience, air conditioning, crockery, carpets, furniture, and staff, including waiters, for service.
The commission further stressed that giving tips is between the customer and service staff, and that the hotel management has got nothing to do with it.
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It also pointed out that the service charge and service tax are mentioned on the menu card in a single line, leading customers to believe that it is a ‘statutory levy’. The commission further directed the restaurant to stop levying mandatory service charges.
In response to Patki’s complaint, the company said that it is a leading service provider in the hospitality industry and that it imposes charges on customers who dine in the restaurant only. The restaurant further stressed that the service charge was displayed throughout the restaurant, including the entrance, the front desk, and the menu.
