Service charge on restaurant bill totally voluntary, cannot forcibly impose it on customer: Kolkata Consumer Commission

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Restaurants cannot forcibly impose service charge on a customer, the Kolkata Consumer Disputes Redressal Commission (Commission) recently held, while directing a restaurant to hand back the service charge it collected from a customer along with a compensation amount.

A Bench of president Swapan Kumar Mahanty and member Ashok Kumar Ganguly ruled that stipulating service charge on a restaurant bill is totally voluntary and not mandatory as per the guidelines for Fair Trade Practice issued by the Central government.

“The OPs must have been aware of the guidelines of Fair Trade Practice relating to charging of service charge from consumers by hotels/ restaurants issued by Department of Consumer Affairs, Government of India, inter alia stipulating that service charge on hotel and restaurant bills is totally voluntary and not mandatory,” the order said.

The Commission, therefore, held that the act of the restaurant insisting on payment of service charge by the complainant was illegal, malafide and contrary to law.

It was the case of the complainant that in late 2018, he and a couple of friends had dinner at Yauatcha Kolkata.

Even as he voiced his reservations against paying the bill which included the service charge, the manager told him that it is mandatory at their restaurant.

To avoid a confrontation, the complainant paid the money but later served the restaurant a legal notice, citing existing provisions and government guidelines and asking for an apology and ₹25,000 as compensation.

When the same was not attended to, the complainant filed the instant consumer case against the restaurant for “illegally pocketing service charge”.

The Bench noted that though notice was served, no written statement in reply was filed by the restaurant.

The Government of India had, in April 2017, issued guidelines on fair trade practices which, among other things, stated that payment of service charge is optional and depends entirely on the discretion of consumers.

The Bench reasoned that the restaurant’s conduct was against the provisions of the Consumer Protection Act and directions of the Ministry of Consumer Affairs, observing that the complainant is a consumer as per the former.

“The OP-1 [restaurant] deliberately failed and/or neglected to ameliorate the grievance of the complainant … The OP-1 has committed unfair trade practice against the complainant,” the Commission said.

It stated that the evidence presented by the complainant remained unchallenged.

It, therefore, ruled that the restaurant had committed an unfair trade practice against the complainant, and directed the restaurant to refund the service charge in full as well as pay ₹13,000 as compensation and litigation charges to the complainant within 30 days.

Advocate Sunil Kumar Gupta appeared for the complainant.

Read Order here:

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