Union Consumer Affairs Minister Pralhad Joshi warned restaurants against charging service charges on customers’ bills. He said that those restaurants which continue to do so, strict action will be taken against them like imposing fine and tarnishing their reputation. Joshi said in the ET report that I have taken this very seriously and have directed the officials to initiate strict action.
Restaurants that continue this illegal practice will not only have to pay heavy fines but will also be brought into disrepute, which could damage their hard-earned reputation. The minister said that this trend has become common in big cities like Delhi, Mumbai and Bengaluru. He mentioned his recent experience at a restaurant in Bengaluru, where service charge was added to the bill. After his friends raised questions, the charge was dropped and the restaurant apologized.
Action against 41 restaurants
Joshi asked restaurants to make changes to their billing software if service charges or similar charges are being automatically added to customers’ bills. His comment came after the Central Consumer Protection Authority (CCPA) said that it has initiated action against 41 restaurants across the country for charging service charges on customers. The minister said that the Delhi High Court has upheld the guidelines of CCPA in which hotels and restaurants have been prevented from imposing service charges on their own. The court rejected the petitions challenging the powers of the consumer regulator.
Action taken against these restaurants
According to an official statement, the CCPA imposed a fine of Rs 50,000 on Chaayos (Sunshine Teahouse) and directed it to refund the service charge collected from the complainant. The authority has also issued orders against Cafe Blue Bottle, China Gate Restaurant, Fiesta Barbeque Nation, FOO Ahmedabad Restaurant, L’Opera French Bakery, Zorro and The Luxury Night Club among others in Patna.
Customers should inform about such matters
Joshi said that charging mandatory service fee is an unfair business practice under Section 2(47) of the Consumer Protection Act, 2019. He urged consumers to inform the ministry about such cases through email or National Consumer Helpline (1915) and also provide necessary details. He said there is a clear difference between a tip given voluntarily by a customer and a service charge imposed compulsorily by the restaurant. The latter (mandatory service charge) is not valid under law.
