'Highly Objectional, Illegal': Mumbai Restaurant Ordered To Pay Rs 25K Compensation Over Mandatory Service Charge

A consumer commission has directed Mumbai’s popular restaurant, Cream Centre, to pay a compensation of Rs 25,000 to a customer for its practice of imposing a mandatory 5% service charge on its bills.

Additionally, the panel ordered the restaurant to refund the Rs 29 service charge that was imposed on the customer.

The South Mumbai District Consumer Disputes Redressal Commission ruled against the eatery, stating that imposing a compulsory 5% service charge on customers is “highly objectionable as well as illegal”.

“It is the bouquet of additional services that completes the experience of customers who choose to dine in at the restaurant. Building this narrative to collect 5% mandatory service charge from customers is highly objectionable as well as illegal and hence cannot be justified at all,” the order stated.

“The restaurant’s act of levying mandatory five percent service charges over and above the food and beverages bills falsely represents that the services are of particular standard, quality, and great as they provide a range of other service including the ambience of the restaurant, air conditioning, crockery, carpets, furniture, staff including waiters for service. that essentially completes the experience of the customers who choose to dine in at the restaurant,” the order added.

The commission noted that gratuity or tips are separate transactions between the customer and the service staff. “Hotel management has no role in this. It is up to the customer to decide the amount of tip and gratuity.”

Yogesh Patki, a lawyer, filed the complaint before the commission on July 21, 2017, against the restaurant owner, Prince Cuisines Pvt Ltd, according to The Times of India report.

Further, the consumer panel said that presenting the wording “Service Tax and Service Charge” together in one line creates a belief that this is a statutory levy and the restaurant owner is empowered by statute to collect this, which is incorrect.

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