Penalty Imposed On This Restaurant For Forcing Customers To Pay Service Charges: This Is What Rules State

Oftentimes, on going to restaurants, the bill comprises a 5% service charge, besides 2.5% GST charges. This service charge, according to the Union Ministry of Consumer Affairs, Food and Public Distribution, if levied by the restaurant body on the customer bill, is considered as an ‘unfair trade practice’.

However, even now, many hotels and restaurants levy a compulsory service charge on the food bill. As a result, the Department of Consumer Affairs has called a meeting with restaurant owners on June 2, to address the issue, as per latest update.

The development has come days after a Hyderabad-based advocate filed a complaint against an upscale restaurant in the city, under the Consumer Protection Act, 2019, alleging the restaurant to force customers to pay a 5% service charge on the food bill.

Further, the Consumer Affairs Secretary Rohit Kumar Singh has also raised the issue in a letter addressed to the National Restaurant Association of India, although the act of paying a tip for services provided by the hotel/restaurant to the customer(s) should be a voluntary action and at the discretion of consumers.

Hyderabad-Based Advocate Files Complaint Against This Upscale Restaurant

On August 27, 2021, a Hyderabad-based advocate Rajashekar Kanaganti filed a complaint against ‘AnTeRa Kitchen and Bar’, Jubilee Hills, for conducting unfair trade practices, under Section 35 of the Consumer Protection Act, 2019.

In his complaint, Kanaganti stated that on visiting the restaurant on August 27, the bill amounted to Rs 3,543, along with a 5% service charge amounting to Rs 164.95.

He added that on mentioning to remove the service charge from the bill, and allow him to give the steward a tip instead, the steward said he wasn’t given any such instructions by his employers about such an option, and that any complaint about this could cost him his job. 

On speaking about the matter to the manager, and showing him the Union government website citing information about service charge guidelines, they were forced to pay the service charge, Kanaganti added.

He then served a legal notice in September to which the restaurant didn’t respond, after which he filed a complaint with the District Consumer Disputes Redressal Commission, accusing the restaurant of illegally pocketing service charges, stated a report.

According to Government guidelines, “It is a separate transaction between the customer and the staff of the hotel or restaurant, which is entered into, at the customer’s discretion.”

When a customer places an order, it amounts to their agreement to pay the prices displayed on the menu card along with the applicable taxes, charging for anything other than these without the customer’s express would amount to unfair trade practice as defined under the Consumer Protection Act, 1986.